Investing

5 Dow Stocks Getting Slammed in 2016 Have Not Even Reported Earnings Yet

2016 has not seen a good start to the year for investors. There are many positives, but the negatives are still winning and caution is in the air. Only six of the 30 Dow Jones Industrial Average stocks are actually up so far this year. That doesn’t sound good, nor does it sound good that five Dow stocks are down 10% to 22%, nor that 10 Dow stocks (including the double-digit drops) are down more than 8%.

The Dow itself is down a sharp 5.5% so far in 2016, after closing out 2015 at 17,425.03. The only good news is that the 2.5% gain on Friday to 16,466.30 is actually 1,000 above the Dow’s low in January of 15,450.56.

Some of the Dow stocks that are down in 2016 haven’t even reported earnings. This is the market bracing for bad news, but one cannot wonder if that means that the earnings bar is being lowered handily. If earnings are not atrocious, perhaps these five Dow stocks could enjoy significant recoveries.

Unfortunately, there are other hurdles to consider here. That pesky strong dollar is hurting exports, and Japan and Europe are now both at negative interest rates. Growth markets like Brazil, Russia, China, India and so on are not living up to their potential. The oil market is weighing heavily on almost everyone now, and the four top presidential candidates all have policies which either are up front or could easily be bad for many big companies and investors. The threats of deflation and capital spending woes have to be considered. Again, a lot of hurdles exist for companies and the economy in 2016.

24/7 Wall St. has identified the year-to-date performance of the five Dow stocks that are down handily so far in 2016 but have yet to enter the earnings confessional. We included past performance, dividend information and what analysts think, as well as gave a reference to these for what was expected at the start of 2016 in the Dow’s bullish and bearish case.


Cisco Systems

Probably none too happy about 2016 so far, Cisco Systems Inc. (NASDAQ: CSCO) is the worst performing Dow technology stock, with a drop of 11.7% year to date. It has not reported earnings but is slated to do so on February 10 after the market closes. Whatever happens here, it’s now Chuck Robbins in charge rather than John Chambers, and the market may still be trying to figure out how to accept new management and a new structure. In November, Robbins said he feels good about how Cisco is positioned for the second half of the year.

China’s major slowdown is of course a huge worry here for Cisco, as are other growth markets. It still seems odd that Cisco is down more than IBM, Intel and Apple without even having reported earnings.

Trading at $23.79, Cisco has a consensus analyst price target of $30.55. As a reminder, Cisco’s last cash balance was $59.1 billion and it had $15.2 billion in deferred revenue. Most importantly, Cisco’s lifetime share buybacks total 4.5 billion, averaging $20.92 per share, for a grand total of $93.9 billion spent. Cisco’s dividend yield is even over 3.5% now. Cisco’s bullish and bearish outlook at the start of 2016 called for a gain of almost 16%.

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