8 Companies That Have Seriously Damaged Prospects for Investors
Cabela’s Inc. (NYSE: CAB) reported earnings Thursday morning of $0.81 per share on $886.0 million in revenue. That was against consensus estimates of $0.86 in earnings per share and $926.5 million in revenue. For the 2014 full year, the company lowered its guidance to $3.10 to $3.20 in earnings per share, compared to consensus estimates of $3.51 in earnings per share.
Following this news, the stock closed down 15% to $49.31 on Thursday and since closed Friday at $49.37. Shares of Cabela’s took this dramatic plunge due to a severely weakened guidance on the full year, attributed to the petering out of firearm sales. Hint, hint: Most people who wanted to load up on guns and ammo already have, so the trend could remain for more than a quarter or two. The company’s stock has a consensus analyst price target of $61.45 and a 52-week trading range of $47.81 to $72.53. That 2014 low was put in on Friday before it closed up six cents at $49.37.
Cree Inc. (NASDAQ: CREE) is supposed to be an LED trend leader. The company reported earnings on Tuesday of $0.24 per share and $427.7 million in revenue, versus consensus estimates of $0.36 in earnings per share and revenue of $432.1 million. Cree gave guidance for the next quarter for earnings of $0.20 to $0.24 per share, and $400 million to $420 million in revenue. That compares to consensus analyst estimates of $0.24 in earnings per share and $419.18 million in revenue.
Following this news, the stock closed down over 17% to $27.28 on Wednesday but ended Friday at $29.67. Shares did manage to bounce almost $2.50 from the lows of the week, but long gone are those old calls from analysts predicting this stock will go above $50, $60, and into the stratosphere. Cree’s stock has a consensus analyst price target of $31.67 and a 52-week trading range of $27.25 to $67.98.
International Business Machines Corp. (NYSE: IBM) took the cake this week, destroying itself with an early Monday surprise that its earnings stank up the joint. It even abandoned its ambitions of $20.00 in earnings per share by the end of 2015. Investors have certainly had enough after this week, if not before. Warren Buffett has even been duped handily here. IBM faces lower margins and a declining backlog as well.
IBM reported earnings on Monday of $3.68 per share and $22.4 billion in revenue, against consensus estimates of $4.32 in earnings per share and $23.37 billion in revenue. Following this news, the stock closed down about 7% to $169.10 on Monday after closing the previous Friday at $182.05. Despite the stock market recovery, IBM kept drifting lower and closed the week out at $162.08. The stock has a consensus analyst price target of $170.57 and a 52-week trading range of $161.10 to $199.21. Be advised: one analyst, who was already at the lowest price target of all analysts before the news, now sees IBM potentially heading down to $125!
Unlike most other companies in this list, Ocwen Financial Corp. (NYSE: OCN) was wrecked this week for allegedly backdating foreclosure letters. News broke on Tuesday and the company released a press release detailing a software error that had been the root problem and that it was being addressed. The New York letter to the company seemed very damning, and investors are having to now decide whether this “error” was a glitch.
How will the public model this risk when New York regulators said that this could potentially cover hundreds of thousands of borrowers? Ocwen’s investors decided to shoot first and ask questions later. Moody’s decided to downgrade Ocwen on the news with credit risks ahead, including the notion that continued regulatory scrutiny further damages Ocwen’s franchise position. This was a $26 stock on Monday. Following this news, the stock closed down over 25% to $19.04, and the stock closed down $0.24 at $19.27 on Friday. Ocwen’s stock now has a consensus analyst price target of $28.33 and a 52-week trading range of $18.57 to $60.18.