It happens to every company sooner or later: Wall Street sets a mark for quarterly earnings, and the firm 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. We're closing out the year with a bang -- there's a household name on the menu, followed by some boutique alternative energy, and some rusty steel. Let's hop to it!

This is the Beyond department
Earnings stumbles happen to the best of companies -- like dual newsletter selection Bed Bath &Beyond (NASDAQ:BBBY), for example. The Motley Fool Stock Advisor and Motley Fool Inside Value selection reported EPS of $0.50, up from $0.45 last year but $0.02 below expectations.

A 12% revenue boost to $1.62 billion was in line with estimates, and same-store sales rose a healthy 4.6% over the 2005 period. The company built up inventory faster than sales. Though that's fairly normal for a retailer in the period leading up to the holidays, we're talking about same-period comparisons here, so Bed Bath is actually accelerating its holiday inventory buildup. Keep an eye on that inventory line in the next quarter, which is the real litmus test for retail operations.

So the miss was small and easily overlooked in the light of nice sales numbers, and management just revved up a $1 billion share-buyback program to control dilution and return some value to shareholders. On the other hand, there are stock options misdeeds to correct. The informal SEC investigation into Bed Bath's options granting practices is still going on, and the company expects to take a $40 million charge in this quarter as a direct result of that. It's not the usual financial restatement effect, though -- this one comes from a program meant to "protect over 1,600 employees from certain potential adverse tax consequences" of faulty options grants.

My fellow Fool Ryan Fuhrmann notes that the stock looks expensive today unless management kicks growth and profits up a notch or two. But he also thinks that this well-respected executive team really should be able to pull it off, making Bed Bath & Beyond more like an AutoZone (NYSE:AZO) style value play than, say, peer Pier 1 (NYSE:PIR). Of course, time will tell, as always.

If you wanna run cool
Let's move on to our next miscreant -- hydrogen-fueled power plant specialist FuelCell Energy (NASDAQ:FCEL). Revenue rose 15% to $9.1 million, but expenses grew even faster. 28% higher costs of about $34.6 million meant a $0.47 loss per share, worse than the $0.40 of last year and the $0.35 average analyst forecast.

FuelCell is often classified as a high-growth stock, the kind that should be forgiven for a string of horrible results because of the promise it holds for the future. But there are a couple of things wrong with that picture. 15% year-over-year revenue growth is a far cry from the early days of Yahoo! (NASDAQ:YHOO) or Starbucks (NASDAQ:SBUX), and a true growth stock is supposed to present better returns on equity over time. These two companies did that. The idea is to reinvest any available cash into the business, paving the way for future growth rather than building equity balances. But FuelCell's ROE is getting much worse over time. The current trailing-12-month figure stands at a negative 39%, compared to negative 30.9% a year ago.

Once again, I'll turn to my colleagues. Veteran cap jingler Rich Smith suggests that it might be better if FuelCell stayed away from commercializing its technology and stayed a pure R&D operation. "Because as far as I can tell, the commercial side of the business seems to operate on the principle of 'the more we sell, the more money we lose.'"

Management does have a few ideas on how to turn this thing around. There's the evergreen cost-reduction component, only not in the traditional pink-slip sense. FuelCell is working on cheaper machines that would be an easier sell to its customers. The company is also looking at applications in natural gas pipelines, as well as expanding into a few exotic markets -- you know, Japan, Korea, California, and Connecticut.

But they better step on it. FuelCell burned $70 million of free cash flow in this quarter and only has $136 million of liquid assets. The company keeps issuing more stock when the cash balance runs low, and people keep buying those shares. I can't for the life of me understand why. I'm undecided on Bed Bath as a value creator or destroyer, but FuelCell is a pretty clear-cut case of shareholder-unfriendly cash shredding.

A glimmer of hope
That brings us to the last underperformer this week -- Commercial Metals (NYSE:CMC). This steel mill operator is in the habit of underdelivering on expectations, and this was the ninth earnings miss in the past 10 quarters. Wall Street wanted $0.74 of earnings per share, but only got $0.71, including a $0.05 charge per share related to inventory accounting.

That's still much better than the $0.57 EPS of last year, though that period included a $0.12 hit per share of those inventory costs. 20% sales growth is a bright point, and revenue came in at $2 billion even this time. Unit volumes were down, in part because of planned outages to upgrade a ladle crane in the South Carolina facility and a furnace shell in Alabama. But higher selling prices on everything but domestic scrap metal made up for those slowdowns.

Management said that this quarter was the likely bottom of this international steel industry cycle, and things should look better in the near future. A weaker U.S. dollar and high demand for steel in Poland, combined with solid domestic demand, makes for a positive outlook. The hardware upgrades make sense if management expects higher demand in the coming quarters.

Commercial Metals may not be an exciting business, but our Motley Fool CAPS community has tagged it with 5 stars, as a likely candidate to outperform the market over the next several years. Do you agree? Disagree? Click on over to CAPS and make your voice heard right now.

Foolish bottom line
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 year, and we'll take a retrospective look at the worst misses of the year. It'll be fun and educational.

Further Foolish reading:

Seeking great deals on unfairly punished stocks? Philip Durell and his merry band of Fools at the Motley Fool Inside Value newsletter service are standing by to help you find great stocks at ridiculously low markdowns. Try a 30-day trial subscription to see whether bargain-hunting is right for you.

AutoZone and Bed Bath & Beyond are two of the stock on the Motley Fool Inside Value scorecard. Bed Bath also appears in Motley Fool Stock Advisor, alongside Starbucks and Yahoo! Grab a free 30-day pass to any of our services today.

Fool contributor Anders Bylund holds no position in the companies discussed this week, and dreads taking those Christmas lights down again. The Fool has a disclosure policy, and you can see his current holdings for yourself.