Nervous you might own S&P 500 stocks that will get swept up in the market's sell-off? There's a way to see which stocks investors are most eager to bail on.
Turns out that investors are quickly trashing S&P 500 stocks like Albemarle, Intel and Ford Motor that missed analysts' second quarter earnings estimates by a mile, says an Investor's Business Daily analysis of data from S&P Global Market Intelligence, FactSet and MarketSurge.
Shares of the nine S&P 500 stocks that missed estimates by 20% or more are down an average 18.2% from the market's high on July 16. That's much worse than the S&P 500's 8.2% drop in that time.
"To date, the market is ... punishing negative earnings surprises reported by S&P 500 companies more than average," said John Butters of FactSet.
Missing Estimates Is Costly For S&P 500 Stocks
To be sure, investors never like it when an S&P 500 company misses earnings estimates. But the horror show from second-quarter misses is more negative than usual.
Companies that missed earnings targets for the second quarter dropped 3.8% from two days prior to the announcement to two days after the news, Butters found. This drop is significantly larger than the five-year average 2.3% drop on negative earnings surprises.
Ford: A Case Study In Disappointment
Back on July 24, Ford reported a second-quarter profit of just 47 cents a share. That was a huge disappointment from the automaker.
Ford's results missed forecasts by nearly 31%. And the punishment was swift. From July 22 to July 26, shares of Ford crashed nearly 21%, Butters says.
The problems at Ford, too, go beyond just the second quarter. Analysts think the company's profit per share will fall 7% this year. And it already sports a low EPS Rating of just 62.
The Biggest Disappointments
When it comes to earnings whiffs in the S&P 500, Albemarle takes the cake. The chemical maker on July 31 reported a quarterly profit of just 4 cents a share, missing views by a whopping 91%.
Not surprisingly, that made a bad year even worse for the stock. Shares plunged more than 19% from the July 16 high and are now off more than 45% this year. Earnings have been a consistent nagging issue at Albemarle. The stock carries a low 38 EPS Rating and investors aren't having it anymore. That's shown by an 8 Relative Strength, out of 99.
But Intel was another big miss. And there's really no excuse for it — given how robust the semiconductor business is. Nonetheless, the struggling chipmaker on Aug. 1 reported a quarterly profit of just 2 cents a share, missing targets by 80%.
And investors are fed up with watching other semiconductor stocks soar as Intel fades away. Shares of Intel are down 62% this year and off 44.7% from the market's high.
If there's one thing investors are making clear, now is not the time to fall short of estimates. The market is simply priced too dearly for that.
Investor Punish Biggest S&P 500 Misses
Largest disappointments for second-quarter earnings
| Company | Ticker | Q2 2024 EPS miss | Stock % ch. from 7/16 |
|---|---|---|---|
| Albemarle | ALB | -91.3% | -19.1% |
| Intel | INTC | -80 | -44.7% |
| Healthpeak Properties | DOC | -44.4 | 0.7% |
| Lamb Weston Holdings | LW | -38.0 | -25.4% |
| Juniper Networks | JNPR | -32.6 | 3.0% |
| Ford Motor | F | -30.8 | -32.1% |
| Digital Realty Trust | DLR | -25 | -9.4% |
| Super Micro Computer | SMCI | -23.2 | -43.8% |
| Realty Income | O | -21.0 | 6.9% |
