Why T-Mobile US Inc (TMUS), Cummins Inc. (CMI) and GrubHub Inc (GRUB) Are 3 of Today’s Worst Stocks

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Stocks toyed with the idea of fighting their way into profitable territory a couple of times on Tuesday. But, without any real economic news to drive them higher against a backdrop of a few-too-many alarming earnings announcements, the bulls just couldn’t get any real traction. The S&P 500’s close of 2,065.89 was 0.26% less than Monday’s closing level.

Why T-Mobile U.S. Inc. (TMUS), Cummins Inc. (CMI) and GrubHub Inc. (GRUB) Are 3 of Today's Worst StocksCummins Inc. (NYSE:CMI), GrubHub Inc (NYSE:GRUB) and T-Mobile US Inc (NYSE:TMUS), however, didn’t dish out anything but a lot of misery today. Here’s what happened.

Cummins (CMI)

It’s no secret that heavy-engine maker Cummins is facing a brisk headwind. But, the strength of that headwind wasn’t fully appreciated until today, however, sending CMI lower by nearly 9%.

The prod for the pullback from CMI was news that the company would be letting a wide swath of its workforce go following a disappointing third-quarter earnings report. All told, Cummins earned $2.14 per share on $4.6 billion worth of revenue, but analysts were looking for a bottom line of $2.60 per share of CMI and sales of $4.91 billion.

With no end to the weakness in sight, the company is opting to cut 2000 jobs (or 4% of its employees) in an effort to save between $160 million and $200 million in expenses.

GrubHub (GRUB)

Investors were anything but hungry for GrubHub today after the restaurant delivery middleman reported Q3 results that were less than tasty.

Revenue growth was no problem — the top line of $85.7 million was up 38% versus the top line from Q3-2014. And, the bottom line of thirteen cents per share of GRUB were in line with estimates. The top line, however, came up short of the average estimate of $86.7 million. A stock that’s trading at 55 times its trailing earnings and 29 times its forward-looking earnings, however — as GrubHub is — has no margin for error.

Monness, Crespi, Hardt & Co. analyst James Cakmak opined:

“It’s getting harder and harder (for GrubHub) to extract more value on a per-restaurant basis, and some markets are reaching greater points of saturation.”

By the time the closing bell rang, GRUB was down 24%.

T-Mobile US (TMUS)

The good news is, wireless service provider has proven it can attract new customers. The bad news is, it’s not yet proven it can translate a higher headcount into a wider profit. Fearing the recent marketing efforts and ploys may not be worth it, the market sent TMUS down nearly 6% on Tuesday.

Last quarter, T-Mobile added (net) 2.3 million subscribers to its customer base. Better yet, it swung from a loss of twelve cents per share in Q3 of 2014 to a 15-cent-per-share profit last quarter. The market, however, as looking for a profit of 29 cents per share of TMUS.

While analysts remain broadly positive on TMUS, some are noting that new phone-pricing and leasing plane are leading to lower revenue on a per-user basis, suggesting T-Mobile may be giving away too much in the name of user growth.

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/2015/10/t-mobile-u-s-inc-tmus-cummins-inc-cmi-grubhub-inc-grub-3-todays-worst-stocks/.

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