Why NetSuite, Deckers Outdoor and PulteGroup Are 3 of Today’s Worst Stocks

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Economic growth in the fourth quarter of 2014 may not be as strong as first thought, according to data from the Bureau of Economic Analysis.

We learned this morning that GDP growth for Q4 was only 2.6%, versus estimates of 3.2% annualized growth. The market tried to shrug it off most of the day, but by the time the closing bell rang, stocks were deep in the red. The S&P 500 fell nearly 1.3% on Friday, and is knocking on the door of a significant breakdown.

Leading the charge lower were names like PulteGroup, Inc. (NYSE:PHM), Deckers Outdoor Corp. (NYSE:DECK) and NetSuite Inc. (NYSE:N), each of which dipped deep into the red ink today thanks to disappointing trailing and/or future earnings.

Deckers Outdoor (DECK)

Why NetSuite, Deckers Outdoor and PulteGroup Are 3 of Today's Worst StocksDeckers Outdoor may have only barely missed its fiscal Q3 earnings estimates, but when it comes to earnings expectations, missing by an inch is almost the same as missing by a mile. That’s largely why DECK stock plunged 20% on Friday, earning “only” $4.50 per share versus an expected profit of $4.52 per share, and dialing back its Q4 profit outlook from 15 cents per share to a breakeven.

Of course, a wave of downgrades immediately following the third quarter report didn’t exactly help the price of Deckers Outdoor shares either. Nine analysts lowered their price targets on DECK stock after earnings were released.

Last quarter, sales for the popular UGG brand of boots were up more than 6%, while sales of Teva branded sandals fell more than 12%.

NetSuite (N)

The good news: NetSuite pumped up its fourth-quarter revenue by 37%, reaching $157.9 million, topping estimates of $155 million. The cloud computing outfit also posted a profit of 10 cents per share of N stock, as expected by analysts.

The bad news: NetSuite doesn’t think the current quarter is going to be quite as good as first expected. During the conference call, CEO Zach Nelson said he’s expecting a top line somewhere between $160 million and $162 million for the first quarter, versus analyst estimates of $162.6 million. The full-year outlook was similarly contracted.

N stock closed 8% lower on Friday.

PulteGroup (PHM)

At first it looked like PulteGroup might come out ahead after posting solid fourth-quarter results on Thursday morning. The homebuilder exceeded revenue as well as earnings expectations last quarter, and PHM stock actually gained 6% on the heels of the news.

A downgrade of PHM stock today, though, undid all of that gain. PulteGroup shares fell more than 6% on Friday to about where they closed on Wednesday, before Q4 earnings were unveiled. For the record, PulteGroup  generated $1.82 billion in revenue in its prior quarter, versus analyst estimates of $1.78 billion. Earnings of 43 cents per share of PHM stock topped estimates of 41 cents for the fourth quarter.

Analysts at Wells Fargo weren’t impressed, however, downgrading the stock from an “outperform” to “market perform.” Wells Fargo now thanks PHM stock is only worth something between $21 and $22 per share, versus a suggested value of $24 to $25 per share prior to the downgrade.

As of this writing, James Brumley did not hold a position in any of the aforementioned securities.

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Article printed from InvestorPlace Media, https://investorplace.com/2015/01/netsuite-deckers-outdoor-pultegroup-3-todays-worst-stocks/.

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