Why LinkedIn, NCR, and Cigna Tumbled Today

Even though stocks soared to close the week, these companies suffered from bad news on the earnings front that held them back. Find out more about why these stocks lagged the market today.

Feb 7, 2014 at 8:32PM

Although we don't believe in timing the market or panicking over daily movements, we do like to keep an eye on market changes -- just in case they're material to our investing thesis.

Friday delivered great news for many stock investors, as major market averages closed the week with gains of more than 1% to wipe out the losses from Monday's market plunge. Yet, even though most stocks benefited from today's optimism, LinkedIn (NYSE:LNKD), NCR (NYSE:NCR), and Cigna (NYSE:CI) weren't so lucky, with sharp declines even on a positive day.

LinkedIn (LNKD) fell 6% despite posting impressive revenue growth during its most recent quarter. Sales rose 47%, but the business social-media giant said that its growth rate would slow to an estimated 33% during the current year, leading some to believe that LinkedIn's share price is too high for revenue to decelerate at such a rapid pace. Yet, the big question for LinkedIn is whether its anticipated rise in spending will pay off in long-term growth, or prove to be a wasted investment. If the net result of LinkedIn's efforts is to shift income into 2015, then today's losses could provide a smart time to buy into the company's long-term growth story.

NCR tumbled 8% after issuing a mixed earnings report last night. The company said that operating income adjusted for pension effects rose 22% from the year-ago period, but revenue increases of just 2% fell short of what investors had wanted to see. NCR's retail and hospitality segments performed especially well, but some unfavorable trends in its financial-services division held the company back. Meanwhile, NCR's future guidance was also a mixed bag, with revenue guidance looking solid, but adjusted earnings expected to come in below investors' expectations. The results show that NCR has more work to do to evolve into a full-service enterprise-solutions specialist.

Cigna (CI) dropped 9% after the health-insurance company also failed to meet earnings expectations. At the same time that costs of its private Medicare insurance business rose, Cigna expects reimbursement rates for its Medicare Advantage plans to fall in the coming year, leading it to issue earnings guidance for 2014 that were 2% to 7% below what investors had expected to see. With Cigna only projecting 1% to 2% growth in customer counts in 2014, it's apparent that the Affordable Care Act and other initiatives haven't delivered the rise in popularity in insurance that some shareholders had expected to see.

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Dan Caplinger has no position in any stocks mentioned. The Motley Fool recommends LinkedIn. The Motley Fool owns shares of LinkedIn. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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