These three companies just didn't live up to Mr. Market's expectations last week. Whether the target was set by the company's own management, by Wall Street analysts, or by the market at large, that miss can have serious consequences, and share prices can suffer in a very real way as a result.
Sometimes, an earnings stumble is a signal to sell, but digging in the dirt is also a good way to find turnaround candidates when they're getting beaten down. Today, we're clicking left of center, running out of room, and washing it all down with quirky sodas.
What other online ad service?
First up is online marketing specialist ValueClick (Nasdaq: VCLK ) , which turned in revenue and operating earnings below Street expectations and the company's own guidance. The miss was a result of weakness in promotion-based lead generation, which is another term for advertising-driven returns. Management lowered its full-year revenue outlook by about $10 million to a $645 million-$660 million range and cut its earnings goal this year to $0.74-$0.76 per share -- a whole nickel less than previous guidance.
It's a tough time to be in online advertising unless your name is Google (Nasdaq: GOOG ) or Yahoo! (Nasdaq: YHOO ) , where the former is the clear market leader and the latter is coming on strong atop its Panama ad platform. ValueClick simply doesn't have an answer to these giants and is probably doing the right thing when it cuts down expectations, staff, and costs in that segment. Surely 'tis better to do well in comparison shopping and such, rather than being a lackluster also-ran marketing machine.
Indeed, a fellow Fool makes a spirited case for ValueClick as nothing more than an acquisition target -- albeit an attractive one -- over in our Motley Fool CAPS community. Find out who said that right here.
A Green Apple a day ...
Next in line, there's fringe soda-popper Jones Soda (Nasdaq: JSDA ) . Jones was supposed to start selling canned fizzy drinks in stores other than Target (NYSE: TGT ) by early summer, but production delays and a series of unfortunate distribution events pushed that release date back too far to count for anything much in this quarter, and the company missed the analysts' earnings and revenue targets by a mile.
Missing half of the lucrative summer season is bad for a soda maven, so this isn't just a matter of shifting the income back half a quarter -- much of this year's opportunity was simply lost. Yes, you could still find Jones' sodas at your local Target or in pretty but bulky glass bottles elsewhere -- like at Panera Bread -- but that just doesn't cut it for a small libation peddler with nationwide ambitions.
So is carbonated turkey-and-gravy water a fizzled fad now, or does Jones get a second shot at stardom? I'd say the latter, but this miss pushed the real opportunities back by as much as a year. The summer buzz was supposed to build in advance of the quirky Thanksgiving seasonal flavors for which Jones is best known today, and then you'd get the hordes attached to those unusual tastes right away. Now, the Cranberry cans could look lonely on those store shelves, as few of the common consumers know what this unfamiliar brand is all about. Reload and try again next year.
A public service announcement followed me home
Last on the dance card today is Public Storage (NYSE: PSA ) , owner of untold thousands of little storage units around the nation. $1.10 of funds from operations (FFO) per share fell just short of the $1.12-per-share consensus expectations, and this was just the latest in a string of disappointing quarters. Share prices now hover around 52-week lows, more than 35% below the February peak around $113 per share.
Of course, it doesn't help much that Public Storage counts as a specialized REIT business, in these times of real-estate distrust and pessimism. The recently completed merger with Shurgard brought in plenty of fresh revenue, but even more fresh operating costs, and the acquisition sapped the cash balance severely.
It wouldn't be exactly fair to call Public Storage a turnaround opportunity, as largely it isn't the company's failings that have been punished in the market lately, but the sector's. Still, you might want to weigh the weakened balance sheet against a larger customer base yourself to see if this stock is for you. Doing your own homework is the Foolish way.
It's been a bad day; please don't take my picture
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 really are stuck in the mud. Come back next week, and we'll take a look at another batch of mishaps and disappointments. It'll be fun and educational.
Further Foolish reading:
- Keeping Down With the Joneses
- Color to the Numbers: Top Turnaround Stocks
- Winning Ugly With Value
- Dirt Cheap Dream Stocks
Seeking great deals on unfairly punished stocks? Philip Durell and his merry band of Fools at theMotley Fool Inside Value newsletter service are standing by to help you find great stocks at ridiculously low markdowns. Try a 30-day trial subscription to see whether bargain-hunting is right for you. Yahoo! is a Motley Fool Stock Advisor pick.
Fool contributor Anders Bylund is a Google shareholder but holds no other position in the companies discussed this week. There's an empty can of Jones Green Apple on his desk, but he bought it at Target. The Fool has a disclosure policy, and you can see his current holdings for yourself.