These three companies just didn't live up to Mr. Market's expectations last week. Whether the target was set by the company's own management, by Wall Street analysts, or by the market at large, that miss can have serious consequences and real effects on share prices.

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, we're stopped at the border, searing heat and all, and then there's a lion at the gate. Yikes!

First up is bookstore chain Borders Group (NYSE:BGP). The spring quarter is never particularly profitable for a bookseller, but last year's $0.31 loss per share turned into $0.51 of non-GAAP red ink this time, much worse than the $0.38 analyst forecast.

Tepid sales growth didn't help any, particularly not the 15% revenue drop at the mall-based Waldenbooks outlets. If there was a bright spot in the results, it's the cheery 22% sales boost abroad, but the dollar value of that gain was small, because most Borders operations are within U.S. borders.

None of the major book retailers are having much fun these days, but Borders is showing the weakest margins across the board and the slowest revenue growth, compared to Books-A-Million (NASDAQ:BAMM) and Barnes & Noble (NYSE:BKS).

The just-finished quarter saw Oprah's book club recommending a new book, but that's not enough to move the needle significantly. The next quarter is a different story, with the final installment in the Harry Potter series fetching more preorders than any of its predecessors. That's an industry-wide boon, after which the whole sector needs to do some soul-searching. How do you make people read dead-tree books these days, in this increasingly digital era?

Borders says it has a new superstore format in mind, due for a 2008 debut. Store remodeling tends to boost sales for a while, but the trick is to make the curious customers stick. We'll just have to wait and see how that works out. Good luck, guys.

*Oh my God, that is so not fair!

Hold ... on!
Master investor Eddie Lampert's Sears Holdings (NASDAQ:SHLD) is our next miscreant, having missed Wall Street's estimates and delivered earnings in the bottom end of its own guidance range. $1.10 per share, excluding $0.30 of one-time items, fell short of the $1.22 consensus forecast.

When sales are slow at Sears and K-Mart, Lampert often saves the day with a few savvy investment moves, but that didn't quite work this time. The "other income" line of the income statement, where such gains show up, came in $0.09 per share lower than last year.

In the bigger picture, things don't look so bad, though. Yes, sales were slow, but Sears is hardly the only retailer to voice concerns about a sluggish consumer herd lately. But even with lower revenues, margins clocked in higher, a combination that shows either a commitment to efficient operations or a company not chasing low-quality sales with excessive rebates and discounts.

Either way, it's smart management, leaving the company in a stronger position for the future. If and when the retail sector picks up steam again -- a question tied to the housing market deflation -- a lean, mean Sears should reap in joy what it sowed in tears.

The kitten that roared
We'll close out the tour this time with independent movie producer Lions Gate (NYSE:LGF). The big cat was supposed to show $0.22 of earnings per share, but could only come up with $0.19.

Fellow Fool Steven Mallas pointed out that management made darn sure the company's fine full-year performance got more room in the press release than the meek fourth-quarter period. Not that he -- or I, for that matter -- holds a grudge on that basis, as the overall business is doing just fine. And don't forget that Lions Gate is a rather small player in the entertainment market. It's hardly as diversified as Disney (NYSE:DIS) with its theme parks and cruise liners, or as well-backed as General Electric (NYSE:GE) subsidiary Universal. Lumpy results is just the name of the game here.

The company has a bona fide hit franchise in its Saw series, and continues to make the most of its exclusive access to playwright/director Tyler Perry and his serious brand of comedy. It's getting harder for the indie studios to get multiplex screen time these days, as major-studio blockbuster releases have started to hog more and more of the available silver-screen real estate. But as long as the marketing message gets out, there's always the DVD release, where the real money is made, and there are some new distribution methods in play these days. But that's another story ...

Foolish finale
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 week, and we'll take a look at another batch of mishaps and disappointments. It'll be fun and educational.

Read on, Fool:

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. Borders is a current Inside Value recommendation, and Disney a Motley Fool Stock Advisor pick.

Fool contributor Anders Bylund is a Walt Disney shareholder but holds no other position in the companies discussed this week. He likes to drop oblique references to R.E.M. hits into his writing whenever possible, and two pans on the same song in one story is just all the more enjoyable. The Fool has a disclosure policy, and you can see his current holdings for yourself.