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Why CoreLogic Stock Crashed 15.5% Today

By Rich Smith - Updated Oct 24, 2019 at 2:28PM

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Optimistic promises don't outweigh an actual earnings miss.

What happened

Shares of real estate information and analytics company CoreLogic (CLGX) tumbled in Thursday trading, and are down 15.5% as of 1:30 p.m. EDT after the company reported Q3 2019 sales and earnings that fell short of estimates.

Analysts had forecast CoreLogic would earn $0.83 per share in adjusted profit on sales of $462 million for the quarter. It missed that earnings prediction by a penny, and fell $3 million short on sales.  

Cartoon analysts confused by a stock chart falling through the floor

Image source: Getty Images.

So what

Q3 revenue of $459 million grew only 1.5% year over year, a fact management attributed to the transformation of its Appraisal Management Company and the "wind-down of noncore mortgage and default technology units."

Actual net income grew much faster, nearly doubling from $0.27 per share a year ago to $0.50 per share this year, but adjusted EPS -- the number Wall Street was focused on -- grew much slower than that, up only 14% year over year (but still much faster than sales growth). Management noted that profit margins improved by 140 basis points, to 30% in terms of adjusted EBITDA, which helps to explain the faster growth in profits than in sales.  

Now what

And management promised further improvements as the year progresses, raising revenue guidance for this fiscal year to about $1.75 billion, and promising adjusted earnings between $2.65 and $2.75 per share. At the midpoint, that appears to exceed analysts' projected $2.68-per-share profit for the year.  

That promised improvement also makes it harder to understand why investors are treating really rather minor misses on sales and earnings in Q3 as such a disaster. Then again, with CoreLogic stock trading for the exceedingly rich valuation of more than 100 times earnings today, maybe even a small misstep wasn't something investors were willing to accept.

Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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