We’re in the height of the earnings season with plenty of companies still left to deliver their third-quarter results. Largely, it’s been a decent if unspectacular earnings season. There have been plenty of winners, like Netflix (NFLX) and Amazon (AMZN). However, there have also been some companies that have experienced dramatic drops due to poor earnings.
Some of these companies are dealing with long-running issues and show few signs of improving. Others are typically strong but suffered from an underwhelming quarter that could be righted in time for the fourth quarter. Here are a few of those companies that didn’t deliver as well as they could have — and suffered accordingly with big drops in share value.
Gannett
It’s been a rough decade for print media as they try to stem losses and prove they can make serious money again. Gannett’s (GCI, Financial) third quarter was more bad news for the industry. The newspaper company lost $24.4 million despite earning money a year ago and came in well under expectations in earnings per share.
Shares are down nearly 25% since the earnings announcement. That wasn’t the end of big news for the media company. After six months of negotiations, Gannett ended its attempt to acquire Tronc (TRNC, Financial) (owner of the Los Angeles Times and other major newspapers). Considering how dysfunctional Tronc’s financial situation appears to be, this is possibly good news for Gannett investors.
The abruptness of the announcement, however, raises some questions.
Jakks Pacific
Toymaker Jakks Pacific (JAKK, Financial) has some big time licensing deals, including Star Wars, Disney and others. Despite those high-profile licensing arrangements, Jakks Pacific disappointed with its third-quarter earnings. Revenues were down 10% on the year and, making matters worse, 2016 guidance was lowered.
The company attributed the disappointing decline in business, in part, to the U.K. Brexit vote. Regardless of the underlying reasons, shares dropped almost 25% since the earnings announcement.
Under Armour
Unlike the other companies on this list, fast-growing sports apparel company Under Armour (UA, Financial) is doing pretty well. It exceeded sales expectations and continued to show growth, although not as much growth as investors hoped. The bad news from its earnings announcement is that growth projections were lowered.
While management at Under Armour stressed that the long-term growth remains promising, investors were none too pleased. Shares are down almost 20% since the earnings announcement. This news comes on top of an already rough 2016. For the year, Under Armour shares are down 68%.
Community Health Systems
The multiyear push for Community Health Systems (CYH, Financial) to become one of the biggest hospital operators in the U.S. is coming to a head. The company invested billions in acquisitions to increase its size. Many of these bets aren’t paying off, and the company is selling some of the hospitals it bought.
Health care can be volatile thanks to the industry's reliance on legislation. Community Health Systems appears to be more volatile than its competitors. A poor earnings preview released in October brought shares down to the lowest point in 52 weeks. The earnings were well under expectations and showed a $56 million loss for the quarter.
Shares are down more than 50%, and there are serious concerns about whether the company can turn things around. Analysts, however, are pessimistic.
Looking ahead
It’s still too early to gauge how successful this earnings quarter is. The volatility of the presidential election further muddies the picture. All signs point to a steady but not particularly special earnings quarter, which definitely isn’t a bad thing when compared to a marked decline.
Disclosure: I am not long any of the stocks mentioned in this article.
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