As we head into the heart of earnings season, it is crucial for investors to keep an eye on companies that may be at risk of disappointing financial results. While some companies have already reported, there are still many set to release their earnings in the coming days. It is essential to pay attention to certain indicators that may signal potential trouble ahead.
Starbucks, a familiar name in the coffee industry, has been facing significant challenges in recent months. With 43 downward revisions in earnings estimates in the past three months, the company’s estimated earnings per share for the current quarter have plummeted by more than 16% to 94 cents. Additionally, the average analyst price target has decreased by 16.5% over the same period. Despite launching value deals to attract customers, Starbucks has seen its stock price drop by 11.6% in the past three months, and it is down more than 21% year-to-date. With fiscal third-quarter results set to be released on July 25, investors should exercise caution when considering Starbucks as an investment option.
Another company on the radar for potential earnings blow-ups is Southwest Airlines. With 28 downward revisions in earnings estimates in the past three months, the consensus estimate has fallen by a staggering 35.1%. Currently estimated at 52 cents per share for the most recent quarter, Southwest Airlines has seen its stock price rise by 2.4% in the past three months, but it is down by 0.6% year-to-date. Activist investor Elliott Management has expressed dissatisfaction with the company’s performance and growth, threatening to oust CEO Bob Jordan and executive chairman Gary Kelly. With second-quarter results scheduled to be announced on July 25, investors should proceed with caution when it comes to Southwest Airlines.
The steel industry has also been facing challenges, with companies like Nucor feeling the pressure. Nucor cut its second-quarter earnings guidance, leading to 21 downward revisions in earnings estimates in the past three months. The company’s earnings for the latest quarter are now estimated at $2.53 per share, marking a significant decline from previous estimates. Shares in Nucor have declined by about 13.5% in the past three months and more than 4.5% year-to-date. Using electric arc furnaces to melt scrap steel, Nucor is scheduled to release its results after the market close on July 22. Investors should be wary of the steelmaker’s upcoming financial report.
Aside from Starbucks, Southwest Airlines, and Nucor, there are other companies that investors should keep an eye on. Old Dominion Freight Line has seen 35 downward revisions in earnings estimates in the past three months, signaling potential challenges in the transportation industry. Intel Corp. has also faced significant changes in EPS estimates, with a 56.5% and 74% decline in the past three and six months, respectively. These companies present potential risks for investors as they navigate through the earnings season.
As we move further into earnings season, it is crucial for investors to be vigilant and cautious. Companies like Starbucks, Southwest Airlines, Nucor, Old Dominion Freight Line, and Intel Corp. have shown signs of potential earnings blow-ups. By closely monitoring these companies and paying attention to key financial indicators, investors can make informed decisions and protect their portfolios from unforeseen risks.