It happens every three months. The best firms in the country report earnings that "beat the street", and are rewarded handsomely with higher share prices. But for those reporting revenues and profits that fall short of Wall Street's expectations, look out!

Here are a few companies that were walloped when revenue and/or EPS results fell short of analysts' expectations. The question is, are they now great buys or are they short sale candidates.

IN PICTURES: 8 Ways To Survive A Market Downturn

Prices Slashed
Stock in Infinera Corp. (NASDAQ:INFN) fell off a cliff two weeks ago, just after the company reported its sales and earnings numbers for the quarter. On the day of the release, the stock was smashed by investors to the tune of 35.5%. The shares have recovered only marginally since then.

Infinera is in the business of selling optical networking systems to national and multinational telecom carriers. Year-to-date, the company's shares have grossly underperformed the rest of the networking sector, falling 5.3% since the New Year. By contrast, the iShares S&P GSTI Networking Index Fund (NYSE:IGN), a proxy for the group, has gained 14.4% for the same period.

Infinera pays no dividend and has no P/E ratio because of negative earnings for the last year.

Falling From Heaven
Apollo Group, Inc.
(NASDAQ:APOL) reported earnings that fell short of expectations and were likewise slaughtered. The shares dropped over 23% on the same day and failed to regain any of their losses in the two weeks that followed.

Apollo is in the education business, offering both online and on-campus programs to students globally. With a market cap in excess of $5.5 billion, the company is also an S&P 500 component, but has acted as a drag on the index thus far this year. While the SPDR S&P 500 ETF (NYSE:SPY) is up 6.2% in 2010, Apollo has fallen 38%.

Apollo is currently under investigation by the SEC for potential mishandling of government loans and other irregularities.

Super Wallop
Shares of SuperValu, Inc.
(NYSE:SVU), another S&P 500 component, were pummeled nearly 15% on earnings, a day after missing EPS numbers. SuperValu stock is down almost 16% on the year, but does pay a 3.3% annual dividend.

SuperValu is one of the largest grocery chains in the United States. The company lowered guidance by roughly 20% after delivering the poor report.

The Wrap:
The question on beaten-down issues like these is whether real value is reflected in the new, discounted share price. Investors searching for oversold stocks due for a rebound would do well to start with these companies. (For related reading on indicators to gauge oversold stocks, see Exploring Oscillators and Indicators: RSI.)

Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!

Related Articles
  1. Investing

    How to Ballast a Portfolio with Bonds

    If January and early February performance is any guide, there’s a new normal in financial markets today: Heightened volatility.
  2. Stock Analysis

    Performance Review: Emerging Markets Equities in 2015

    Find out why emerging markets struggled in 2015 and why a half-decade long trend of poor returns is proving optimistic growth investors wrong.
  3. Investing News

    Today's Sell-off: Are We in a Margin Liquidation?

    If we're in market liquidation, is it good news or bad news? That party depends on your timeframe.
  4. Investing News

    Bank Stocks: Time to Buy or Avoid? (WFC, JPM, C)

    Bank stocks have been pounded. Is this the right time to buy or should they be avoided?
  5. Stock Analysis

    Why the Bullish Are Turning Bearish

    Banks are reducing their targets for the S&P 500 for 2016. Here's why.
  6. Stock Analysis

    How to Find Quality Stocks Amid the Wreckage

    Finding companies with good earnings and hitting on all cylinders in this environment, although possible, is not easy.
  7. Chart Advisor

    How Are You Trading The Breakdown In Growth Stocks? (VOOG, IWF)

    Based on the charts of these two ETFs, bearish traders will start turning their attention to growth stocks.
  8. Mutual Funds & ETFs

    Pimco’s Top Funds for Retirement Income

    Once you're living off the money you've saved for retirement, is it invested in the right assets? Here are some from PIMCO that may be good options.
  9. Chart Advisor

    Watch This ETF For Signs Of A Reversal (BCX)

    Trying to determine if the commodity markets are ready for a bounce? Take a look at the analysis of this ETF to find out if now is the time to buy.
  10. Investing News

    What You Can Learn from Carl Icahn's Mistakes

    Carl Icahn has been a stellar performer in the investment world for decades, but following his lead these days could be dangerous.
RELATED FAQS
  1. Should mutual funds be subject to more regulation?

    Mutual funds, when compared to other types of pooled investments such as hedge funds, have very strict regulations. In fact, ... Read Full Answer >>
  2. Do ETFs pay capital gains?

    Exchange-traded funds (ETFs) can generate capital gains that are transferred to shareholders, typically once a year, triggering ... Read Full Answer >>
  3. How do real estate hedge funds work?

    A hedge fund is a type of investment vehicle and business structure that aggregates capital from multiple investors and invests ... Read Full Answer >>
  4. Are Vanguard ETFs commission-free?

    While some Vanguard exchange-traded funds (ETFs) are available commission-free from third-party brokers, a large portion ... Read Full Answer >>
  5. Do Vanguard ETFs require a minimum investment?

    Vanguard completely waives any U.S. dollar minimum amounts to buy its exchange-traded funds (ETFs), and the minimum ETF investment ... Read Full Answer >>
  6. Can mutual fund expense ratios be negative?

    Mutual fund expense ratios cannot be negative. An expense ratio is the sum total of all fees charged by an asset management ... Read Full Answer >>
COMPANIES IN THIS ARTICLE
Trading Center