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May 2011 S&P 500 Losers
Investors were reminded of the importance of earnings as the four worst performing stocks in the S&P 500 in May 2011 earned that title through missing estimates or lowering future profit outlooks.
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The Losers
Computer Sciences Corporation (NYSE:CSC) fell 23% in May 2011, as the company cut earnings guidance twice during the month. On May 2, the company reduced its fiscal 2011 earnings outlook from $5.20 to $4.75 per share due to the renegotiation of a contract with the U.K. National Health Service.
Computer Sciences Corporation did it again at the end of May 2011, as the company reported earnings per share of $1.09 for the fourth quarter of fiscal 2011, below the consensus of $1.11. The company also established earnings guidance for fiscal 2012 between $4.70 and $4.80 per share, below the consensus of $5.07. Computer Sciences Corporation also suffered from the company's delay in filing its 10-K due to a probe into the company's accounting practices. (For related reading, see A Primer On Investing In The Tech Industry.)
Staples (Nasdaq:SPLS) ended the month down by 20% as this retailer missed guidance on earnings for the first quarter of 2011, reporting 28-cents per share compared to street estimates of 32 cents. The company also reduced its earnings outlook for the full year, giving a range of $1.35 to $1.45 per share, compared to consensus estimates of $1.53 per share.
Big Lots (NYSE:BIG) reported earnings for the first quarter of fiscal 2011, and although the company beat consensus estimates by 1 cents, investors didn't take too kindly to the company's reduction in earnings guidance and comparable-store sales estimates for the current quarter and full year.
Big Lots said that comparable-store sales will range from flat to down 3% for the second quarter of fiscal 2011, and flat to down 2% for the full fiscal year. The company now expects income from continuing operations to range from $2.75 to $2.90 per diluted share in fiscal 2011, considerably lower than the estimates of $3.03 per diluted share.
Big Lots marked the second quarter down as well, to a range of 38 cents to 48 cents per diluted share versus estimates of 53 cents per diluted share. The stock closed down by about 20% for the month. (Financial discipline is the key to successful growth in the retail industry. For more, see The 4 R's Of Investing In Retail.)
Sears Holdings (Nasdaq:SHLD) rounds out our list of the worst performing stocks in the S & P 500 in May 2011, as the company dinged investors twice during the month. In early May, Sears Holdings announced that the company would report a net loss from $1.35 to $1.81 per diluted share for the quarter ending April 30, 2011. When Sears Holdings officially reported its earnings later in the month, the loss was 17-cents per share worse than what analysts were expecting. The stock ended the month down by about 20%. (For more, see Analyzing Retail Stocks.)
The Bottom Line
Earnings mean everything in the stock market and this was confirmed in May 2011, as the market brutalized four stocks that disappointed investors' expectations.
Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!
The Losers
Computer Sciences Corporation (NYSE:CSC) fell 23% in May 2011, as the company cut earnings guidance twice during the month. On May 2, the company reduced its fiscal 2011 earnings outlook from $5.20 to $4.75 per share due to the renegotiation of a contract with the U.K. National Health Service.
Computer Sciences Corporation did it again at the end of May 2011, as the company reported earnings per share of $1.09 for the fourth quarter of fiscal 2011, below the consensus of $1.11. The company also established earnings guidance for fiscal 2012 between $4.70 and $4.80 per share, below the consensus of $5.07. Computer Sciences Corporation also suffered from the company's delay in filing its 10-K due to a probe into the company's accounting practices. (For related reading, see A Primer On Investing In The Tech Industry.)
Staples (Nasdaq:SPLS) ended the month down by 20% as this retailer missed guidance on earnings for the first quarter of 2011, reporting 28-cents per share compared to street estimates of 32 cents. The company also reduced its earnings outlook for the full year, giving a range of $1.35 to $1.45 per share, compared to consensus estimates of $1.53 per share.
Big Lots (NYSE:BIG) reported earnings for the first quarter of fiscal 2011, and although the company beat consensus estimates by 1 cents, investors didn't take too kindly to the company's reduction in earnings guidance and comparable-store sales estimates for the current quarter and full year.
Big Lots marked the second quarter down as well, to a range of 38 cents to 48 cents per diluted share versus estimates of 53 cents per diluted share. The stock closed down by about 20% for the month. (Financial discipline is the key to successful growth in the retail industry. For more, see The 4 R's Of Investing In Retail.)
Sears Holdings (Nasdaq:SHLD) rounds out our list of the worst performing stocks in the S & P 500 in May 2011, as the company dinged investors twice during the month. In early May, Sears Holdings announced that the company would report a net loss from $1.35 to $1.81 per diluted share for the quarter ending April 30, 2011. When Sears Holdings officially reported its earnings later in the month, the loss was 17-cents per share worse than what analysts were expecting. The stock ended the month down by about 20%. (For more, see Analyzing Retail Stocks.)
The Bottom Line
Earnings mean everything in the stock market and this was confirmed in May 2011, as the market brutalized four stocks that disappointed investors' expectations.
Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!
by
Eric Fox
Eric J. Fox, CFA, is a freelance financial writer and has previous experience working in the asset management industry as an equity analyst and portfolio manager on the buy side. His favorite area to write on is the energy sector and he keeps current on the industry by reading Haynesville Shale, Permian Oil and Gas and various other blogs.
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