Every quarterly earnings season is filled with both winners and losers. Lately the losers have outpaced the victors, with next season shaping up to be another disappointment. Some of the biggest flops are expected to come from big names including Chipotle, Baidu, Valeant, Workday and Pier 1 Imports. According to the Estimize data, these names are trending downward, owing to negative year-over-year growth estimates, heavy downward revisions and a history of missing expectations. The combination of these factors have typically led to a significant underperformance in the stock.
Chipotle Mexican Grill (NYSE:CMG) Consumer Discretionary – Hotels, Restaurants & Leisure
Chipotle is still having trouble getting out from under the numerous health outbreaks starting in late 2015. The burrito chain that was once heavily praised as revolutionizing the fast-casual sector is now largely an afterthought to a catalogue of other food chains, one being Shake Shack (NYSE:SHAK). Amidst the turmoil, earnings and traffic trends have taken a dramatic downturn. Last quarter comparable restaurant sales decreased a 3.6% on a 16.6% decline in total revenue. In an effort to regain customers, Chipotle has hit the ground running with new promotional campaigns and marketing initiatives. Some of these include Chiptopia which rewards customers for frequent visits throughout the summer. More recently, the company launched free kid’s meals on Sundays and complimentary beverages for students. While Chipotle continues to win back the hearts of its once-loyal customers, investors have hammered the stock. Shares are down 12% year-to-date and 45% in the past 12 months.
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 of its worst quarterly report in nearly 8 years. Earnings reported a 39% decline from the same period last year while revenue dipped nearly 10% over the same timeframe. Baidu’s struggles in the second quarter were primarily driven by sluggish search advertising revenue. This downturn is expected to carry on through the third quarter and the rest of fiscal 2016. Analysts at Estimize are calling for earnings per share of 96 cents on $2.711 billion in revenue. Compared to a year earlier, this represents a 30% decline on the bottom-line and 6% on the top.
Valeant Pharmaceuticals (NYSE:VRX) Health Care – Pharmaceuticals
Valeant was one of the best-performing stocks on Wall Street in the first half of 2015, but over the past 12 months, a price-gouging initiative has sent shares plunging. After reaching highs of over $250 per share, the stock has plummeted over 90%, to all-time lows where it is today. The ongoing freefall forced management to oust now former CEO Michael Pearson (LON:PSON), who led the company through the thick of it’s price hikes. With several new board members -- one being infamous hedge-fund manager Bill Ackman and a new CEO -- Valeant is still fumbling. Its most recent report delivered a nearly 50% decline on the bottom-line and 10% on the top. With no signs of improving anytime soon, the upcoming quarter is shaping up to be another disaster. The Estimize consensus is calling for earnings per share of $1.72 on $2.55 billion in revenue. That projects as a 36% decline on the bottom line and 8% on the top on a year-over-year basis.
Workday (NYSE:WDAY) Information Technology – Software
Workday’s most recent report delivered mixed results; a miss on the bottom line and right in line on the top. But what was most concerning is it marked another quarter that both earnings and revenue growth decelerated. This is a universal problem for many of the small to mid cap technology companies and one of the main reasons they suffer during earnings season. Even so, the stock is still up 15% year-to-date and 22.5% from a year earlier. In the past few months the stock has received a handful of downgrades from the likes of Citigroup (NYSE:C), Needham and Wedbush.
Pier 1 Imports (NYSE:PIR) Consumer Discretionary – Hotels, Restaurants & Leisure
The ongoing shift toward discount retailers has taken its toll on Pier 1 Imports. Consumers have become more attracted to value channels and online retailers have left companies like PIR grasping at straws. Unsurprisingly, this systemic shift has put severe pressure on earnings growth. Over the last 2 quarters EPS has dropped over 100% year-over-year with revenue growth slightly below zero. The stock, as you might suspect, is down 18% year to date and 56% in the past 12 months. Unfortunately, these wounds won’t be healed in the upcoming quarter. Historically, shares drop 3% immediately following an earnings report and continue to drop for the next 30 days.
How do you think these names will report?