The Week's Biggest Stock Laggards

The markets continued their upward march this week, adding to the already substantial gains for 2012. Greece was no help, as a debt agreement that would unlock the next round of bailout funding and let the country sidestep a messy default proved elusive. The economic news in the United States was a bit more optimistic, as multiple manufacturing surveys surprised economists on the upside, while unemployment claims continued to fall. In addition, minutes from the Federal Reserve's most recent rate-setting meeting stoked expectations of further bond buying by the central bank.

By the time the week closed, the Dow Jones Industrial Average (INDEX: ^DJI  ) had tacked on 1.2%, while the broader Russell 3000 managed an even more robust 1.5% gain.

The 3 Worst-Performing Sectors

Russell 3000 Sector Weekly Price Change Month-to-Date Price Change
Utilities 0.3% 0.7%
Materials 0.6% 1%
Industrials 0.9% 3.4%

Source: S&P Capital IQ. Weekly price change is Feb. 10-Feb. 17. Monthly price change is Jan. 31-Feb. 17.

It's still earnings season, and some of the biggest losers over the past week were whacked thanks to lackluster quarterly reports. The top line for DG(R) (Nasdaq: DGIT  ) looked good, at least. Total revenue of $108 million grew 44% from the year before. However, earnings per share fell 69% to $0.16, which was $0.05 below what Wall Street analysts had expected the company to report. Management described 2011 as a "transitional" year for DG(R) and said that its mix of business will serve it well going forward, but investors clearly weren't convinced.

Meanwhile, property-management software maker RealPage (Nasdaq: RP  ) felt the sting of a lackluster forecast. For the fourth quarter, the company's revenue grew 32% year over year, and earnings per share of $0.10 matched expectations. However, at the midpoint of management's guidance, both 2012 revenue and earnings per share were short of the average Wall Street estimate.

The 3 Worst-Performing Russell 3000 Companies

Company Weekly Price Change
DG(R) (28.7%)
PMFG (28%)
RealPage (23.6%)

Source: S&P Capital IQ. Weekly price change is Feb. 10-Feb. 17. Includes only companies with market caps of $250 million or more.

Also among the week's worst performers were MEMC Electronic Materials (NYSE: WFR  ) and Vonage (NYSE: VG  ) . Continuing the earnings theme, MEMC's report was a bit of a bloodbath. After eking out a $0.05-per-share profit in the fourth quarter of 2010, the company managed a massive $6.44-per-share loss in the most recent quarter. Backing out one-time items and tax effects, the company showed investors a more modest adjusted loss of $0.09 per share, but that was still worse than the $0.06 loss that Wall Street had expected. By the time the week closed, MEMC's shares had lost 13%.

For Vonage, the closely watched earnings-per-share number looked good on an absolute basis. After adjustments, it reported $0.10 in per-share profits, up from $0.06 in the prior year. That was good, but not quite good enough, as analysts were hoping for $0.11. Looking more broadly, though, the results paint a pretty uninspiring picture, with both revenue and EBITDA -- a cash-flow measure -- down slightly from a year ago. For the year ahead, the company expects to post EBITDA of between $120 million and $140 million. Though S&P Capital IQ only listed one analyst with an estimate on that metric, that analyst's expectation was for a considerably higher $161 million. Investors shaved 20% off of Vonage's value during the week.

That's it for the weekly laggards recap. Looking to turn the tides and find some strong outperformers in the year ahead? The Motley Fool has created a brand new free report titled "The Motley Fool's Top Stock for 2012." In it, my fellow Fools reveal a top pick that's poised for explosive growth ahead. Get instant access -- it's free.

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Fool contributor Matt Koppenheffer has no financial interest in any of the companies mentioned. You can check out what Matt is keeping an eye on by visiting his CAPS portfolio, or you can follow Matt on Twitter, @KoppTheFool, or on Facebook. The Fool's disclosure policy prefers dividends over a sharp stick in the eye.


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