Investing

9 Companies That Destroyed Shareholders This Earnings Season

Chris Lange

Published: June 8, 2017 8:35 am

Last Updated: January 12, 2020 11:15 am

Earnings season is all but officially closed, and the stock market has hit all-time highs even as the summer doldrums start to take hold. Although the tailwind of broad earnings growth and favorable would-be policies of the Trump administration have bolstered the markets in general, there are still many major companies that just are not benefiting at all from the economic gains. Many companies simply destroyed their shareholders during and after earnings in the past month or two.

24/7 Wall Street has identified nine such companies. In order to qualify for the list, a company has to be actively traded or it had to have a market capitalization of more than $1 billion. Almost all the companies also would be well known to consumers and investors alike.

To qualify as a “destroyer,” the stocks had to suffer big losses after earnings. For a backup qualification, those same share prices have either not rallied much after the post-earnings drops or they have continued to head lower. Some of the companies have even hit 52-week or multiyear lows. How promising does that sound for a stock market within 1% of all-time highs?

We have included some additional color on why each stock has lagged, as well as a recent trading history, consensus analyst price target data, a 52-week trading range and the market cap of each company.

Akamai

When Akamai Technologies Inc. (NASDAQ: AKAM) released its first-quarter financial results back in May, earnings were better than expected. But looking at how the stock is performing, this is not the entire story. What tanked this stock was its guidance, given separately in the conference call. Also it did not help that analysts took this opportunity to cut their price targets on Akamai.

The company said that it had $0.69 in earnings per share (EPS) and $609.2 million in revenue, compared with consensus estimates from Thomson Reuters of $0.67 in EPS and revenue of $604.69 million. The same period of last year reportedly had EPS of $0.66 and $567.73 million in revenue.

In the conference call, management commented that it expects current quarter revenue to be in the range of $597 million to $609 million, which fell somewhat short of expectations. The consensus estimates for the second quarter were $0.65 in EPS and $623.02 million in revenue.

Shares of Akamai closed Wednesday at $48.53, with a consensus analyst price target of $62.68 and a 52-week trading range of $46.81 to $71.64. The company has a market cap of $8.4 billion. Since the earnings report was released, the stock is down over 20%.

Frontier Communications

Frontier Communications Corp. (NYSE: FTR) was among the worst performers of any S&P company in all of earnings season. On top of earnings and its dividends just never making any sense at all, the reality is that it did finally slash that dividend.

The company posted a net loss of $0.08 per share and $2.36 billion in revenue, compared with consensus estimates that called for a net loss of $0.05 per share and $2.34 billion in revenue.

Shares of Frontier closed most recently at $1.22, in a 52-week range of $1.19 to $5.24. The consensus price target is $2.14 and the market cap is $1.4 billion. Since the company reported earnings, the stock is down 37%.

Macy’s

This may have been one of the biggest disappointments in all of retail. Closing stores is sometimes costlier and takes longer than expected, and the move to e-commerce just hasn’t been anywhere close to smooth.

Macy’s Inc. (NYSE: M) said that it had EPS of $0.24 and $5.34 billion in revenue, which compared with consensus estimates that called for $0.34 in EPS and revenue of $5.47 billion. In the same period of last year, the retailer posted EPS of $0.40 and $5.77 billion in revenue. Comparable sales on an owned basis were down 5.2% in the first quarter and down 4.6% on an owned plus licensed basis.

In terms of guidance for the 2017 full year, the company expects to see comparable sales on an owned plus licensed basis to decline between 2.0% and 3.0%. At the same time, total sales are expected to be down between 3.2% and 4.3%. The consensus estimates for the 2017 full year are $3.45 in EPS and $24.8 billion in revenue.

Shares of Macy’s were last seen at $21.81, with a consensus price target of $26.26 and a 52-week range of $21.51 to $45.41. The market cap is $6.6 billion. Shares have actually dropped 25% since the earnings report.

Snap

Already expected to lose money now and for the near-term, Snap Inc.’s (NYSE: SNAP) commentary around user growth and its position in the world turned off shareholders and analysts.

The company reported a net loss of $2.31 per share and $149.6 million in revenue. Consensus estimates had called for a net loss of $0.19 per share and revenue of $157.98 million. The same period of last year had a net loss of $0.14 per share and $38.80 million in revenue in revenue.

During the quarter, daily active users (DAU) grew to 166 million from 122 million in the first quarter of last year, an increase of 36%. DAUs increased 5% quarter over quarter from 158 million.

Shares of Snap closed Wednesday at $19.56. The consensus price target is $21.03, the 52-week range is $17.59 to $29.44, and the market cap is $23 billion. Since the earnings were released, the stock is down 15%.

Twilio

When Twilio Inc. (NYSE: TWLO) released earnings on May 2, its posted net loss of $0.04 per share on $87.4 million in revenue fell short of consensus estimates for a $0.06 per share loss and $83.6 million in revenue. During the quarter, the company recorded 40,696 active customer accounts, as of March 31, 2017, compared to 28,648 in the first quarter of last year.

While Twilio extended its Amazon Web Services pact, its largest customer is Uber and that is about 12% of Twilio’s revenue — and the company noted that Uber is taking over its messaging service and handling more of its software needs.

Shares of Twilio were last seen at $25.25, in a 52-week range of $22.80 to $70.96 and with a consensus analyst target of $32.90. The company has a market cap of $2.3 billion. Shares are down 25% since earnings were reported.

U.S. Steel

Taking the cake for bad earnings in the metals sector was United States Steel Corp. (NYSE: X). What had been one of the Trump-bump and infrastructure winners posted weaker than expected earnings.

U.S. Steel was supposed to report earnings of $0.34 per share, but its adjusted loss came in at $0.83 per share. The net loss was even worse, at $180 million, or $1.03 per share. The company also generated negative operating cash flow of $135 million for first quarter of 2017 that was mostly tied to an investment in working capital in the quarter.

U.S. Steel shares closed Wednesday at $20.87, with a consensus price target of $28.33 and a 52-week range of $14.80 to $41.83. Since the earnings report in late April, the stock is down 33%.

CyberArk Software

CyberArk Software Ltd. (NASDAQ: CYBR) reported its first-quarter financial results earlier in May, and the company said that it had $0.28 in EPS and $59.0 million in revenue. Consensus estimates had called for $0.27 in EPS and revenue of $62.44 million. In the same period of last year, CyberArk posted EPS of $0.29 and $50.38 million in revenue.

In terms of the outlook for the second quarter, the company expected to see EPS in the range of $0.23 to $0.25 and revenues between $61.0 million and $62.0 million. The consensus estimates called for $0.31 in EPS and $68.28 million in revenue.

CyberArk closed most recently at $47.61 a share. The stock has traded in a 52-week range of $44.13 to $59.28. The company has a total market cap of $1.7 billion. Over the past month, the stock is down about 14%.

W.W. Grainger

W.W. Grainger Inc. (NYSE: GWW) was already weak ahead of earnings, and then came a sell-off on the news in April, followed by more selling. The company posted $2.88 in EPS on $2.54 billion in revenue. The consensus estimates were $3.01 in EPS and $2.56 billion in revenue.

Shares of Grainger closed Wednesday at $169.51. The consensus price target is $186.83, and the 52-week range is $168.58 to $262.71. The company has a market cap of nearly $10 billion. Since the earnings report in mid-April, the stock has retreated 24%.

Groupon

Early in May, Groupon Inc. (NASDAQ: GRPN) reported its fiscal first-quarter financial results. The online-coupon company said that it had $0.01 in EPS on $673.6 million in revenue, versus consensus estimates that called for a net loss of $0.01 per share and $717.1 million in revenue.

Shares of Groupon closed most recently at $3.03, in a 52-week range of $2.92 to $5.94. The consensus analyst target is $4.20. The company has a market cap of $1.7 billion. Since earnings were reported the stock is down 24%.