The market managed to fight its way out of the red for a while today, but when push came to shove later in the session, the bulls couldn’t hold the bears back. The S&P finished the session down 0.08%, closing at 2,113.86.
Among the names leading the broad charge lower were Eaton Vance Corp. (NYSE:EV), LendingClub Corp. (NYSE:LC) and Hewlett-Packard Company (NYSE:HPQ). All of them were sacked due to weak results, an alarming outlook, or both.
Hewlett-Packard Company (HPQ)
Hewlett-Packard Company had a decent enough first quarter of fiscal 2015. Although revenue of $26.8 billion was a bit shy of the $27.3 billion analysts were expecting, the profit of 92 cents per share of HPQ stock was a penny better than forecasts of 91 cents.
The problem — and the reason HPQ stock tanked 10% –– was the company’s outlook. Hewlett-Packard Company now only expects to earn between 84 cents and 88 cents per share for the current quarter, versus analyst estimates of 95 cents per share of HPQ stock.
On a full-year basis the company expects to report a profit of somewhere between $3.53 and $3.73 per share. Analysts had been looking for $3.95 per share.
An exceedingly strong U.S. dollar was deemed the culprit for the dire outlook. CEO Meg Whitman said of the unfavorable exchange rates:
“We’ll work hard to offset these impacts through re-pricing and productivity but fully mitigating currency movements of this size would require reducing investments and mortgaging our future. We won’t do that.”
LendingClub (LC)
New publicly-traded company LendingClub is learning the hard way that investors can be brutally unforgiving of earnings shortfalls. In their defesne, the numbers LendingClub reported were brutally disappointing.
The good news: Revenue for the online-lending organization doubled, from $33.5 million in the same quarter a year ago to $69.6 million for the fourth quarter of 2014. The bad news: Though the profit of once cent per share of LC stock was in line with estimates, it was also half of the two cents per share LendingClub earned in the fourth quarter of 2013. Still, the current quarter and full-year (2015) revenue outlook were all in line with analyst estimates.
So why the big 13% drop from LC stock? It may have largely been spurred by a surprisingly aggressive spending plan. CEO Renaud Laplanche added to the earnings press release:
“We have continued to expand our reach through 2014 by doubling the size of the business again, while continuing to invest heavily in future growth and risk management. … 2015 is going to be another investment year, and we intend to continue growing originations and revenue at a fast, yet deliberate pace.”
Eaton Vance (EV)
Asset management firm Eaton Vance posted disappointing Q1 results Wednesday morning, to say the least.
The company reported a profit of 61 cents per share of EV stock on $354.9 million in revenue, versus estimates of 63 cents and $367.9 million, respectively. That, however, wasn’t what sent shares lower by more than 4%.
What pulled the rug out from underneath EV stock was the 59% decline in total profits thanks to sharply higher — 29%, in fact — expenses. Although the market had a pretty good idea things were going to be rough, seeing the official numbers roll in even a little worse than expected really hit home for some investors.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.
