Earnings disappointments were the primary culprit behind the worst-performing stocks in the S&P 500 in October. The biggest losers were from a broad range of sectors, including technology, finance and education.
IN PICTURES: 10 Biggest Losers In Finance
Apollo Group (Nasdaq: APOL) was the worst-performing stock in the S&P 500 in October, falling 27%. The company withdrew its preliminary business outlook for fiscal 2011 and revealed significant declines in enrollment at the University of Phoenix. Apollo Group said that declines here may top 40% on a year-over-year basis.
Apollo Group and the rest of the for-profit education industry is under intense regulatory pressure from the government, which is concerned about the level of debt students incur relative to the merit of the degree received. The U.S. Department of Education is considering new rules that may hurt business, and Florida is investigating the industry for "unfair and deceptive enrollment practices".
Marshall & Ilsley (NYSE: MI) reported a net loss of $169.2 million, or 32 cents per share in third quarter 2010, missing consensus estimates for the quarter. The bank charged off $560.3 million in loans during the quarter, up 5% from Q3 2009. The company also had its bond rating cut by Standard & Poor's after the earnings release. This stock fell 15% during the month.
JDS Uniphase (Nasdaq: JDSU) also lost 15% of its value during October as this stock suffered collateral damage from investors reacting to perceived weakness in the optical networking industry. Oclaro (Nasdaq: OCLR) and Infinera (Nasdaq: INFN), which compete with JDS Uniphase in some areas, both came out with disappointing business outlooks for the Q4. The stock was also hit with a downgrade from a sell-side firm, and that was all that the herd needed to start selling.
Lexmark International (NYSE: LXK) reported its financial results for the Q3 and missed analyst expectations for revenues. The company also put out a weak outlook for revenue growth in the Q4 and saw a large rise in inventory, which spooked some investors that saw this as a precursor to more disappointment later on. Lexmark fell 15% during the month.
Regions Financial (NYSE: RF) fell 13% in October after the company reported a larger loss than investors anticipated. The bank saw a double-digit increase in charge-offs on its loan portfolio, as it continued to be hurt by real estate losses.
The worst-performing stocks in the S&P 500 in October were the victims of weak earnings relative to investor expectations. Other factors included an unfriendly regulatory environment and continued problems with real estate loans. (Impairment charge is a term for writing off worthless goodwill, but you need to know what it means and what its potential impact is on EPS. Check out Impairment Charges: The Good, The Bad And The Ugly.)
Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!