These three companies just didn't live up to Mr. Market's expectations last week. Sometimes an earnings stumble is a signal to sell, but digging in the dirt is also a good way to find turnaround candidates while they're getting beaten down.
This week, there was an embarrassment of riches to choose from, as dozens of companies missed Wall Street's targets in the thick of the earnings season.
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Reported EPS
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Estimated EPS
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Reported Revenue (millions)
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Estimated Revenue (millions)
|
CAPS Rating
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TASER International
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($0.02)
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($0.01)
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$21.1
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$27.0
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***
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MEMC Electronic Materials
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$0.92
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$1.01
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$531
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$557
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****
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Ford
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($0.62)
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($0.27)
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$38,600
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$34,600
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*
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The legal shooting gallery
My first pick is stun-gun maker TASER International (Nasdaq: TASR ) , which reported a net loss of $0.02 per share on $21.1 million in sales. The average analyst had expected a smaller loss and about $27 million of revenue.
The repeat Motley Fool Rule Breakers recommendation blamed the weak economy, by way of fewer orders from police departments across the country. Even the gas price crunch factored in, according to TASER management, because those cops would rather fuel their patrol cars than invest in newfangled weaponry.
I can't help but believe in TASER, though. The company is facing nearly 40 lawsuits at the moment, over issues like wrongful death, injury during arrest, and training injuries. TASER has won or dismissed more than 60 such suits over the years, and I have a hard time finding any lost cases.
Taser has recorded exactly one charge for litigation judgment expenses in the past six years, and that case is on appeal. If you're gonna get shot, would you rather have it done by a painful and dangerous device like TASER's products -- or a Smith & Wesson (Nasdaq: SWHC ) M&P45? Yeah, that's what the juries seem to think, too.
The lawsuits will eventually run dry when the alleged victims finally understand that they don't appear to stand a chance in court. TASER's competition in the non-lethal weaponry sector is nearly nonexistent, and this company stands to make a mint if and when that court of public opinion turns in a "not guilty" verdict with prejudice. And I think it will, eventually.
The building's not going as planned
Here's one miscreant who doesn't want to blame the economy for its woes. MEMC Electronic Materials (NYSE: WFR ) makes silicon wafers for semiconductor chips and solar panels, and it should be doing hunky-dory on the solar cell materials alone.
But a broken air conditioner in an Italian manufacturing plant and some sloppy soldering in Texas combined to put a crimp on production for a while, and so the sales were weaker than expected.
The company reported pro forma earnings of $0.92 per share on $531 million in sales, below the $1.01 and $557 million, respectively, expected by Wall Street.
Chalk the physical mishaps up to growing pains, as both the loose pipe fitting and the failed heat exchanger were installed fairly recently in MEMC's quest for expansion. Semiconductor demand "seems to be uncertain," says CEO Nabeel Gareeb, but solar orders are streaming in from from major customers like Yingli Green Energy (NYSE: YGE ) and LDK Solar (NYSE: LDK ) . On balance, MEMC remains on track to impress the Street with a strong second half of the year.
Just one request, guys -- hire better contractors for the next plant expansion project, OK?
Where's Mustang Sally when you need her?
Out looking for a Toyota (NYSE: TM ) hybrid, that's where. She sure ain't cruisin' for a Ford (NYSE: F ) anymore.
The all-American car maker reported a pro forma loss of $0.62 per share on $38.6 billion in revenue. Analysts had expected a smaller loss -- about $0.27 per share -- but lower sales to the tune of $34.6 billion. When sales come in strong but earnings drop like a rock, it's usually a sign of desperate discounting action.
And who can blame management for going the low-cost route to win consumers' hearts? The truck-heavy product lineup is ill-suited for rising gas prices and lightweight wallets, and the company is trying to mend its ways. Ford is designing Euro-style small cars now, pushing small and hybrid-powered SUVs, and walking away from the heavy trucks. Will Sally come and wipe those weeping eyes anytime soon? I don't think so.
Take it away, Fool!
Some of these underperformers are victims of larger circumstances, while others might have only themselves to blame. It's up to you to decide which down-on-their-luck companies should be able to pull themselves up by the bootstraps, and which ones are stuck in the mud for real.
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