There's a reason we warn readers not to pay too much attention to analyst estimates for future growth. Sometimes the dreams don't come true, and when reality rears its head, it can be ugly with a capital Yuck.
Take big truck maker, and maker of big trucks, Navistar International
But Wall Street wisdom predicted more -- up to 30% more. To rub salt in the second-quarter wound, the firm issued guidance for the next quarter of $0.60-$0.70 per share, well below the $0.76 to $1.20 that the same industry soothsayers were seeing in their crystal balls. The news sent investors screaming for the exits, spanking the stock 14% in early trading.
Despite cutthroat competition from the likes of DaimlerChrysler
All right, so Navistar didn't quite get the job done. Still, you can't help but wonder if investors don't deserve a bit of today's reckoning. Sure, it's tempting to believe that your favorite firm will always under-promise and overpay, but that's an especially dangerous game in low-margin, cyclical industries. When third-party earnings estimates vary greatly from the company line, Fools tread carefully, and bid accordingly.
If you dig the big rigs, share your passion for engine grease in the Fool's Buying and Maintaining a Car board.