Argentina-based financial services company Grupo Supervielle S.A. ( SUPV 4.37% ) has reported its second-quarter results, and investors are not happy. As of 10:45 a.m. EDT on Friday, the stock is down by more than 21%.
Current-quarter results failed to meet expectations. Earnings of 2.96 pesos per share (about $0.10) were 57% lower than a year ago. Net interest margins were down significantly, and were worse than what analysts had been looking for. And trading revenue wasn't great.
Generally speaking, disappointing quarterly results can be overcome if the outlook is strong, but that simply isn't the case here. While Grupo Supervielle didn't disclose its full-year guidance, it did say that the company was lowering its guidance in the wake of the poor quarterly results and slowing loan growth.
Separately, Grupo Supervielle announced a significant restructuring of its business. Effective right away, four of the company's consumer finance units will be joined under the same leadership, a move that the company says is "aimed at enhancing customer focus, achieving cost synergies, and accelerating cross-selling opportunities."
Not only did the company's results disappoint investors, but management also sounded quite pessimistic. To begin his message in the company's earnings release, CEO Patricio Supervielle simply said, "We are disappointed with the results for the quarter." Anytime a CEO says something like that, it's a solid bet that the stock will go down.
The question now becomes: Will the headwinds that caused the disappointing results (lower-than-expected margins, poor trading results, etc.) be temporary, or will they linger? If they are temporary, now could be a good time to get in at a discount. If not, there could be more downside ahead.