With Q3 earnings season all but over, investors can rejoice in the gains that were reported during the quarter. Earnings and revenue came in higher than a year earlier with future estimates expected to build on this success. But as earnings season typically goes, there will always be a handful of losers that disappoint shareholders. For the fourth quarter they include Baidu, Abercrombie & Fitch, Valeant, Ford and Amazon. According to the Estimize data, these names are trending downward, owing to decelerating or negative year-over-year comparisons, downward revisions and a history of missing expectations. The combination of these factors have typically led to a significant underperformance in the stock.
Baidu (NASDAQ:BIDU) | Information Technology – Internet, Software & Services
Investors are slowly losing hope that Baidu will ever come close to Alphabet's (NASDAQ:GOOGL) success in the United States. The oft-referred-to 'Google of China' is coming off yet another disappointing quarter. Earnings climbed by 4% after 4 consecutive quarters of negative growth. Revenue on the other hand, slid 5% due to higher acquisition, bandwidth and content costs. Baidu’s offline to online model coupled with lower interest from advertisers to use the search engine have taken the biggest toll on results lately. On a positive note, Baidu is prepared to test its first self-driving car in the coming weeks. If Baidu can successfully develop and deploy the first wave of driverless vehicles that could cause investors to overlook its weak search business. Nonetheless, the Estimize community is pessimistic about the fourth quarter. Analysts are calling for earnings of 90 cents on $2.57 billion, reflecting a 12% decline on the bottom line and 5% on the top.
Abercrombie & Fitch (NYSE:ANF) | Consumer Discretionary – Specialty Retail
Abercrombie has a knack for disappointing investors given its recent string of disappointing quarterly results. The teen retailer is clearly having trouble navigating this retail environment that favors fast fashion trends and discounters, both of which do not represent Abercrombie’s core offerings. Meanwhile, mall-based traffic continues to see a sharp downturn due to the proliferation of online channels. The third quarter featured many of these ongoing trends as same-store sales dropped by 6% across U.S. and international locations. Hollister stores was the lone bright spot during the quarter, delivering flat growth from a year earlier and only a 1% decline in comps year to date. Estimize contributors are down on the retailer’s performance during the key holliday months. Analysts are calling for earnings of 81 cents, 6% lower than a year earlier. That estimate has dropped 27% in the past 3 months. Revenue for the period is forecasted to drop 4% to $1.04 billion.
Valeant Pharmaceuticals (NYSE:VRX) | Health Care – Pharmaceuticals
The Valeant story has been told multiple times over the past year after a pricing-gouging scandal caused shares to hit rock bottom. With several new board members, one being infamous hedge fund manager Bill Ackman, and a new CEO, Valeant continues to fumble. Valeant's massive debt load along with a weak pipeline have held back most investors from jumping back into the stock. To combat its mounting debt, Valeant is exploring options to sell its stomach drug business for about $10 billion. This would handle a large portion of its bank loans and remove a big area of concern for prospective investors. What it won’t do is boost financial performance, which analyst’s forecast to edge down in the fourth quarter. The Estimize community is forecasting a 30% decline on the bottom line to $1.66 per share and 10% on the top to $2.43 billion. Shares are down nearly 85% from a year earlier and historically drop an additional 2% immediately following an earnings report.
Ford Motor (NYSE:F) | Consumer Discretionary – Automobiles
While General Motors (NYSE:GM) continues to thrive in this environment, Ford’s experience has been the exact opposite. The company is coming off a third-quarter report that featured a 42% decline on the bottom line along with flat growth. Ford’s mishaps come amid a pullback in production across North American markets. Domestic markets should continue to see some downside as gas prices and interest rates are set to rise in the coming months. Meanwhile, currency headwinds will take a toll on international performance, which has held together quarterly results lately. The Estimize community believes Ford will its decline during the fourth quarter. Analysts are forecasting a 31% decline on the bottom line to 37 cents per share on a 6% drop on the top to $35.71 billion.
Amazon.com (NASDAQ:AMZN) | Consumer Discretionary – Internet & Catalog
Amazon doesn’t frequently make an appearance on lists that touch on losers or most likely to miss earnings estimates, but the upcoming quarterly results appear to be stacking up against the online retailer. Amazon is coming off a relatively lackluster third quarter that featured a miss on the bottom line and revenue in line with consensus estimates. For a company that so frequently smashes analyst’s estimates, this was the equivalent missing by 10%. Furthermore, guidance for the fourth quarter came in slightly below expectations mostly due to weak operating income and margins. Amazon’s ongoing initiatives to expand in almost every facet of its business will inevitably put pressure on margins, which is seeing downward revisions of late. Earnings estimates dropped by 30% to $1.54 following its weak third-quarter results with revenue largely in line with previous forecasts. It’s becoming more apparent that investors expect nothing short of the best from Amazon where despite its greatness, certain financial metrics are simply unattainable.
How do you think these names will report?