It happens to every company sooner or later: Wall Street sets a mark for quarterly earnings, and the company misses that goal. 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. Today, planes are dropping out of the sky, batteries don't carry a charge, and I'm not sure whether we're looking at a company or an individual. Hang on.

Flying without wings
Our first underperformer this week is Embraer Embresa Brasileira (NYSE:ERJ), an airplane manufacturer possibly best known for landing a supply contract with JetBlue (NASDAQ:JBLU). Wall Street was hoping for profits around $0.46 per ADR, but the company reported just $0.33 per depositary receipt on a 21% revenue drop, all measured in U.S. dollars.

Part of the year-over-year weakness stems from a stronger Brazilian Real versus the dollar, which clearly is outside the company's control. But the shortfall against expectations also stemmed from delayed delivery of parts for about 10 planes, pushing their delivery and payment for the order into the next quarter.

The company expects to deliver about 160 planes in 2007 and 200 in 2008, and the firm's order backlog stands at $13.3 billion as of Sept. 30. That includes 137 new orders added in the just-completed quarter, or a 30.4% increase in the dollar value of backlogged orders. Embraer needs to get a grip on the supply chain to avoid further pushbacks and embarrassments, but the company has a lot going for it. It's no wonder the Motley Fool CAPS community has awarded the stock a respectable four-star rating and an 82-to-3 bulls-to-bears ratio. This miss is nothing more than a small speed bump.

Somewhere under the rainbow
We're moving on to diversified consumer products supplier Spectrum Brands (NYSE:SPC), the company behind Rayovac batteries and Remington shavers. Unlike Embraer, Spectrum Brands attracts more scorn than praise in CAPS, where the stock sports our lowest one-star rating. As for results, the company was expected to produce a modest $0.06 profit per share, but instead delivered a loss of $0.07 per share.

It seems like this company can't get its ducks in a row. Enlisting some star power, with Brett Favre now in Rayovac commercials and Cindy Crawford pushing Remington's personal grooming products, seems to have boosted sales a tiny bit, but earnings have refused to follow. The balance sheet shows $28.4 million of cash and equivalents, but $2.3 billion of long-term debt, and to add insult to injury, Spectrum Brands gave its goodwill balance a hard look and a $433 million haircut. The company's brands just don't carry the prestige they once did, which explains why it's so hard to sell more of them.

Management is looking for buyers for some of those product lines, and I mean on the corporate level. It's unclear which brands are on the selling block, but anything that can bring in some cash for that sorely unbalanced balance sheet would be very welcome. The sad fact is that Spectrum's flagship brand runs a distant third in the North American battery market to Energizer (NYSE:ENR) and Duracell, and even Brett Favre couldn't pull out a win singlehandedly in that game. If you're looking for a turnaround opportunity, I'd suggest you look elsewhere -- this one will have trouble grabbing those bootstraps.

Put on your Sunday best, kids -- we're going to Sears!
Let's round off this roundup with another familiar face: Sears Holdings (NASDAQ:SHLD). The Sears and Kmart agglomerate, under chairman and activist investor Eddie Lampert's control, reported adjusted EPS of $0.83. That's $0.15 below expectations, but much better than the $0.48 per share reported a year ago. Sales declined $0.3 billion to $11.9 billion.

Same-store sales declined 3% from last year, but tighter cost controls led to increased operating income, and a $101 million investment gain boosted reported EPS. I can't blame Wall Street for sticking an unreachable target in front of Sears, because the company doesn't issue guidance, doesn't hold quarterly conference calls, and in general makes it tough to figure out what's going on inside the black box.

What's clear is the company's financial strength. There is $2.1 billion of cash on the balance sheet, and the stock price has gained almost 60% year to date. Why is the stock price important? It comes into play if Lampert wants to add more pieces onto his Frankenretailer, because a stock-swap deal is much more effective when the acquirer's shares are worth a lot. There is rampant speculation about exactly where the chairman will turn his interests next, including candidates like Home Depot (NYSE:HD) and RadioShack (NYSE:RSH).

But whatever that property might be, it's going to come with either substantial real estate holdings or generous cash flows, either of which can fuel further acquisitions down the road. Real estate value is the main reason why the Kmart and Sears merger was so successful, since the company has unlocked plenty of the value in its vast combined land holdings through wheeling and dealing discontinued stores. Dealmaking is what Eddie Lampert does best, and he'll continue to do it -- he's just not too keen on sharing his plans with investors before executing them.

In the CAPS database, 429 investors are rooting for Sears, while 29 think there's something fishy going on. In all, the stock carries a middling three-star rating, and most of the bulls are citing Eddie Lampert as the reason for investing here. In other words, a share of Sears Holdings might as well be a share in Eddie Lampert Enterprises. Act accordingly.

At the end of the day
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 really are stuck in the mud. Come back next Monday, and we'll take a look at another batch of mishaps and disappointments. It'll be fun and educational.

Further Foolish reading:

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Embraer and JetBlue are Stock Advisor picks. Home Depot is an Inside Value recommendation.

Fool contributorAnders Bylundis a JetBlue shareholder but holds no other position in the companies discussed this week. The Fool has adisclosurepolicy, and you cansee Anders' current holdingsfor yourself.