The Worst Of The Worst

Our weekly roundup of the five worst performers last week in the U.S. market includes two companies that drank the leverage Kool-Aid and three others that provided guidance or earnings below expectations.

Don't Disappoint Analysts
Syniverse Holdings (NYSE:SVR) is a communications services company that provides services to telecommunications carriers. The company reported earnings last week and reiterated current year estimates of net income of $69-$74 million, with revenue of $485-$495 million. However, analysts polled by Thomson Reuters had estimates at the high end of the range for the company, and were looking for revenues of $497.3 million. The stock finished the week down 52.5%. (Learn how you can use Wall Street analysts' consensus earnings estimates, check out Earnings Forecasts: A Primer.)

Tenet Healthcare (NYSE:THC) is a hospital company that owns 59 facilities in nine states, as of December 31, 2007. Tenet reported earnings last week and the company lost 6 cents per share compared to analyst expectations of a 3-cent loss. The company also cut its forecast for 2009 on earnings and revenue. The provision for doubtful accounts, or what is known as "bad debt expense", increased 5.8% to $163 million in the quarter, although the ratio to same hospital net revenue was unchanged at 7.6%. Tenet had a major accounting scandal years ago, and the company seems to never have recovered from it. The company ended the week down 48.4%.

Genworth Financial (NYSE:GNW) is an insurance company that provides life insurance, annuities, mortgage insurance and other financial products in the U.S. and internationally. Genworth reported earnings last week that were below analyst expectations. This would normally be enough to cause a major selloff, but it was accelerated when the company suspended its dividend and share buyback program, and withdrew guidance for 2009. Genworth was also hit by losses in its investment portfolio and posted a net investment loss of $478 million. The stock lost 44.8% of its value last week.

Debts-R-US
General Growth Properties (NYSE:GGP) is a real estate investment trust (REIT) that specializes mostly in retail properties throughout the U.S. The company reported earnings last week and missed analyst estimates on funds from operations (FFO), an important metric that investors follow to analyze REITs. General Growth also suspended its dividend and announced a halt to all new activity. What concerned investors the most was that the company has $900 million in debt to rollover by the end of November, a task that might be to difficult to accomplish in the current environment. The stock lost 50% of its value last week. (For more on valuing REITs, read Basic Valuation Of A Real Estate Investment Trust and The REIT Way.)

Las Vegas Sands (NYSE:LVS) owns and operates casinos worldwide including the Venetian and the Sands Expo and Convention Center in Las Vegas. The company borrowed heavily to fund expansion globally, and it disclosed last week that it might soon be in violation of its debt covenants. A covenant violation would allow its lenders to demand an accelerated payment on the debt they hold. The company levered up to build large casino projects and is currently building a complex in Singapore. Las Vegas Sands lost 50.5% of its value last week.

Bottom Line
The list of the five worst performers last week in the U.S. market shows that excessive leverage continues to be the downfall of many companies, and that some are still overly optimistic about earnings for 2009. Both these indicate that the market probably has further to fall in the coming months.