"You can't
tell what's

snot from
what's not."

-- "Cold Rheum," by AR Ammons

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.

We have an unusually familiar selection of household names on tap this week, considering the dearth of financial reports just before we tango into the next earnings season. May I have this dance?

Metal mania
Record-breaking aluminum prices couldn't rescue Alcoa (NYSE: AA) from an earnings miss, as the company's reported net income of $0.44 per share fell far short of the $0.48-per-share target set by analysts.

Management noted that they faced "challenging economic conditions" with rising costs on energy and raw materials, and a $0.08 EPS hit from the weakening dollar. In the same breath, they said that it was "a strong first quarter," and that Alcoa is "well positioned to boost returns when the North American and European economies rebound."

Walking the talk, the company spent $430 million to buy back 14 million shares in the quarter. That's nearly five times the size of the Q1 2007 buybacks, and Alcoa has now spent $2.8 billion on share repurchases over the last 12 months. I think that speaks volumes about management's confidence in future opportunities.

The wrong kind of rave
Drugstore kingpin Rite Aid (NYSE: RAD) squeezed into our lineup with a $0.08 loss per share on a heavily adjusted basis, which compared badly with the $0.07 loss the average analyst expected. How big were the adjustments? They were $1.12 per share, dude. That's not an adjustment; it's a whole alternative reality.

The extra costs are related to the $3.4 billion acquisition of the Brooks/Eckerd chain last summer, as the two-headed beast continues to hack away on that second neck. Rite Aid is only about halfway into the 16-month integration process, giving Walgreen (NYSE: WAG) and CVS Caremark (NYSE: CVS) plenty of time to focus on each other more than on this puny third-string rival.

Fellow Fool Ryan Fuhrmann is worried about the amount of debt on Rite Aid's books, and thinks that its minuscule market cap looks fair and equitable. No argument from me, Ryan. This dog needs to have the fleas brushed out before I'd touch it.

The General Electric boogie
Last but most definitely not least, there's General Electric (NYSE: GE). The massive industrial-and-entertainment conglomerate reported earnings of just $0.43 per share, while Wall Street wanted $0.51 per share. The result? A 12.8% one-day price drop that shook the Friday markets and helped to drag the Dow benchmark down by 2%. Yowza!

Management explained that the turbulent financial markets at the end of March were at the root of this evil. As the government and JPMorgan Chase (NYSE: JPM) scrambled to scrape Bear Stearns (NYSE: BSC) off the kitchen floor, the usual buyers apparently lost interest in some asset sales GE had on tap. A few sales never happened, and some others got pushed into the next quarter, and there's your earnings shortfall for the March quarter.

GE is so big and so complex that it's easy to lose sight of all of the moving parts in the hulking machine. GE Money and the commercial finance division accounted for $58 billion of last year's $173 billion total revenue, as well as $10.3 billion out of the whole company's $29 billion in operating profit. The manufacturing, health care, and entertainment segments sit on top of a massive bank with a rare AAA corporate credit rating and huge importance to the health of the company.

Fairfield has been mostly immune to the consumer subprime meltdown, but when corporate finances start to stagger too, there's nowhere left to hide. I think that the immediate stock discount was an overdone knee-jerk reaction, but the banking experts among you might know better. Swing on over to GE's CAPS page and let us know, will ya?

Break it down!
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.

Further Foolish reading:

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Fool contributor Anders Bylund holds no position in the companies discussed this week, but he's becoming a big fan of heavy metal of late. The Fool has an ironclad disclosure policy, and you can see his current holdings for yourself.