Lowering guidance can bring on a world of pain for a company. Not only does the stock take a hit when the news is announced, but it can also continue to fall for quite a while afterwards. Investors face a dilemma: Is it time to join the mad dash for the exits, or is this a buying opportunity in disguise?

A guide to the future
It's not always easy to tell whether your company is having a fire sale or burning down. But Motley Fool CAPS can make understanding the difference a whole lot simpler.

The investor-intelligence database compiles the opinions of more than 105,000 professional and novice investors, revealing which stocks they think will and will not outperform the market. Pairing that information with companies that have recently lowered their guidance should help us decide which of the stocks are hotter than hot, and which ones are not worth wasting water to douse. A high CAPS rating combined with lowered guidance could present you with a real deal.

Here are five companies that have recently guided lower, and what CAPS investors think of them:



Analyst Est. or Previous Guidance

Updated Guidance

CAPS Rating
(5 max)

Bon-Ton Stores (NASDAQ:BONT)





Flotek (NYSE:FTK)





J. Crew (NYSE:JCG)










Wind River Systems (NASDAQ:WIND)





Source: Briefing.com; Motley Fool CAPS.

Remember, this isn't a list of stocks to buy -- just ideas for further research.

Remember this
Some might think that the recent pullback in the price of oil is a sign that the aftershocks of rapidly rising fuel prices are finally catching up with the oil companies. The amount of miles driven in the U.S. fell 4.3% in March compared to last year, the first time driving has fallen in the month since 1979, and the largest year-to-year drop since figures were first recorded in 1942. Yet it's becoming increasingly clear that American drivers aren't the only ones keeping prices high. Worldwide demand for oil remains strong and surging -- particularly from emerging economies like China.

Flotek, which sells drilling, lifting, and pumping equipment to the oil and mining industries, has benefited from this demand. Its top line has roared ahead at a 70% clip for the past five years. Yet competitive price pressures have compressed margins, and this past quarter, it missed analyst expectations once again. After cutting its forecasts for the year, the stock fell as much as 19% before recovering.

While Flotek has not been as diversified as some of its rivals, such as Baker Hughes (NYSE:BHI), it is looking to derive more of its revenue from international sources. A new microemulsion contract with Halliburton (NYSE:HAL) could also represent an additional growth driver.

Rather than being fearful, investors like top-rated CAPS All-Star stockgeek17 see the recent drop as an opportunity:

i know they just revised down their eps estimates for this year moments ago, but i see this company continuing to grow for years to come, though not at quite the rate it has in prior years. the high price in commodities has oil, nat gas, minerals, metals, etc. companies squandering to meet demand at such a sweet price... this is where companies like flotek come into play- expanding as the energy and mining industries hum along and explore for more supply. it's now trading near its 52 week low, down about 70% from its 52 week high... price to book and debt to equity ratios are on the higher side, so there is some risk, but i believe the potential reward far outways this... gotta love bottom fishing!!

Guide on!
Looking at stocks whose shares have taken a dive on diminished outlooks can be a painful experience. Your input, though, can help guide other investors to higher prospects for growth, even in the face of lower guidance. Head to Motley Fool CAPS, and let your voice lead the way.