This Week's 5 Dumbest Stock Moves

These five companies got it wrong this week.

Jun 20, 2014 at 5:17PM

Stupidity is contagious -- even respectable companies can catch it. As we do every week, let's look at five dumb financial events from this past week that may make your head spin.

1. Pier pressure
It may be time to cut bait on Pier 1 Imports (NYSE:PIR). The home-furnishings retailer saw profitability decline to $0.16 per share in its latest quarter, well below the $0.20 a share profit that analysts were targeting. 

This shouldn't be a surprise: Pier 1 hasn't beaten Wall Street's bottom-line forecasts in more than a year. The company is also hosing down its full-year outlook, now seeing per-share profit of $1.14 to $1.22. That's short of its earlier outlook for per-share profitability of between $1.16 and $1.24. Making matters worse, Pier 1's new guidance is based on a lower projected diluted share count. In other words, things are slightly worse than the per-share targets suggest.

Pier 1 didn't have a problem growing sales, with a healthy 6.3% spike in comps, but shrinking margins held back its performance. The stock plunged 13% on Thursday after the uninspiring report. 

2. Seethe World
SeaWorld Entertainment (NYSE:SEAS) recently updated its official theme park app. Neat new features include a car tracker to help users locate their vehicles in crowded parking lots and the ability to purchase Quick Queue tickets for expedited attraction access.

However, SeaWorld makes the cut because -- in the case of SeaWorld Orlando, at least -- it won't offer attraction wait times until you're actually in the park. It's not good form to delay letting folks know until they are inside the gates that it may be a bad day to be there, given the long ride queues. The country's leading theme park operator doesn't do that. 

3. YouTube holds a note
Google's (NASDAQ:GOOG) YouTube could be about to make some enemies among music artists and their fans. Billboard reported that YouTube is struggling to get some indie labels to sign up to its upcoming music subscription service, and disagreements on royalty rates will likely mean YouTube will remove videos by artists who don't play along. 

This is a pretty big deal, as it reportedly includes notable artists such as Adele, Arctic Monkeys, and Vampire Weekend. It's easy to see YouTube's side of the argument: It doesn't want its free video-sharing site to offer a broader catalog than what it expects folks to pay to stream. However, given the lack of success that tech giants have had with their premium music services, it doesn't seem worth angering YouTube users for a platform that isn't likely to work.

4. Stage Coach robbery
Shares of Coach (NYSE:COH) hit another four-year low this week after the company hosted a poorly received investor day. The struggling seller of premium handbags and related accessories will close 70 underperforming stores. Coach also warned of a double-digit sales decline in fiscal 2015. 

It's hard for a luxury brand to regain prestige after it loses its appeal. Someone needs to tell Coach that investor days aren't supposed to be such depressing affairs. 

5. When you're here, you're family
It's not getting any easier for Darden Restaurants (NYSE:DRI). The casual-dining chain may have finally found a buyer for Red Lobster several weeks ago, but its flagship Olive Garden restaurants aren't doing a whole lot better.

Darden posted uninspiring financial results on Friday morning. Olive Garden -- the concept that is supposed to do a lot of the heavy lifting at Darden now that Red Lobster is on the way out -- served up its fourth consecutive quarter of negative comps. Darden is also breaking out its Red Lobster contributions to the bottom line, and we see that it accounted for $0.29 per share of the $0.66 a share that the chain posted in profitability for the quarter. Overall profitability took a hit of $0.19 per share during the three-month period, but even with that, the company missed Wall Street's profit target for the fourth time in the past five quarters. Darden's weak earnings from continuing operations lead one to wonder why it declared another quarterly dividend of $0.55 per share this morning. If Olive Garden doesn't turn things around once Red Lobster is handed off later this year, that payout doesn't seem sustainable.

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Rick Munarriz has no position in any stocks mentioned. The Motley Fool recommends Coach and Google (C shares). The Motley Fool owns shares of Coach and Google (C shares). 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.

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

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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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