Investing

7 Serious Earnings Disappointments That Just Stung Shareholders

Jon C. Ogg

Published: November 9, 2015 3:28 pm

Last Updated: January 13, 2020 5:22 pm

Monday’s trading session was marred by overseas weakness, profit taking and a realization that the Federal Reserve now is likely to target a December interest rate hike. It turns out that some companies just really missed their mark, or that investors wanted a whole lot more, on their earnings reports.

24/7 Wall St. has tracked seven big stock moves to the downside. Included is how each has missed or what the problem was, as well as trading color on each.

CommScope Holding Co. Inc. (NASDAQ: COMM) got dusted despite beating expectations with a $0.53 earnings per share (EPS) figure, versus $0.50 estimates, but that was before a loss after deducting items. The problem was that 1) revenue was down almost 3% to $972.6 million and guidance for the fourth quarter looked lower and light versus expectations. CommScope is a 45.4 billion company by market cap, and that is after an 11% drop to $28.65. Its 52-week trading range is $20.19 to $34.12. Expectations just looked like they might have been too high for the connectivity and infrastructure solutions provider.

EV Energy Partners L.P. (NASDAQ: EVEP) hit a 52-week low after missing on revenues. The master limited partnership (MLP) reported that it expects its distributable cash flow below levels necessary to maintain a $0.50 quarterly distribution. While this sounds bad, the reality is that EV Energy’s yield equivalent going into earnings would have been a 36% distribution. Should its holders have really expected that to be realistic? This MLP was trading down by 26% at $4.04, and it hit a 52-week low with its new year range of $4.02 to $32.98.

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Hertz Global Holdings Inc. (NYSE: HTZ) is a report that, well, just hurts. Its $237 million profit was short of expectations of $0.52 per share, or $0.49 per share on the adjusted earnings. Revenue also was a bit disappointing at $2.98 billion. Despite blaming foreign currencies, buying back shares and cost cutting, shares of Hertz were down 12% at $16.55 on over 23 million shares (three times normal) with less than an hour of trading left. Hertz has a 52-week range of $14.85 to $25.72, and the market cap after the drop was $7.6 billion.
Kandi Technologies Group Inc. (NASDAQ: KNDI) reported that earnings came in at $0.13 per share, up from $0.12 a year ago, and sales grew 14% to $50.5 million. No estimates were available at the time, but this is an electric vehicles maker in China. Shouldn’t electric cars be growing faster there? Kandi’s American depositary shares (ADSs) were down 15% at $9.16 in Monday’s late-day trading. It has a 52-week range of $5.05 to $18.17.

Plug Power Inc. (NASDAQ: PLUG) was once considered one of the greatest promises in fuel cell systems. That was then, and the low-energy prices are here now. The company reported a loss of $0.06 per share rather than expectations for a $0.05 per share loss. Still, revenues grew over 50% to $31.4 million, and that was slightly ahead of the thin universe of expectations. The company said that it is on track for a third straight quarter of record revenues. Well, shares were last seen down 13% at $2.40 ahead of Monday’s close. Plug Power’s 52-week range is $1.56 to $5.46.

Priceline Group Inc. (NASDAQ: PCLN) reported earnings that seemed OK on the surface, but expectations were just higher considering its performance and a competitive space. Third-quarter gross travel bookings were up 7% to $14.8 billion, but they were up 22% on a constant currency basis. Priceline’s gross profit for the third quarter was up 12% to $2.9 billion, but that would be up 29% on a constant currency basis. What seems to have hurt was fourth-quarter guidance of gross travel bookings up 1% to 8%, international gross travel bookings of approximately 3% to 10% and U.S. gross travel bookings down 5% to 10%. Also, its guidance for non-GAAP net income per diluted share between $11.10 and $11.90, versus Thomson Reuters at $12.42 per share. Priceline was down 9.5% at $1,313.50, within a 52-week range of $990.69 to $1,529.75.

Horsehead Holding Corp. (NASDAQ: ZINC) was down sharply after reporting a loss of $27 million, or -$0.48 in EPS, and the adjusted loss was $0.45 per share. We had consensus estimates for a loss of $0.25 per share, but the revenues of $107 million were actually ahead of estimates. These shares were last seen down 13% at $2.47 before Monday’s close, on about 150% of normal trading volume, versus a 52-week range of $2.12 to $16.77. The company signaled that the quarter was adversely hit by a sharp decline in commodity prices, lower EAF dust receipts reflecting weaker steel production and some one-time charges tied to inventory and LME-related price adjustments.

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