Second-quarter earnings continue and, so far, the results have been pretty good, but there are some stocks to dump because they didn’t pull their weight.
According to FactSet, 80% of companies listed on the benchmark S&P 500 index have reported better than expected earnings per share, and 64% have reported revenue that was higher than forecast. This bodes well for the stock market as many analysts saw Q2 of this year as likely the weakest period for corporate earnings before a rebound in the second half.
That said, not every company has hit the ball out of the park with their Q2 print, and those are the stocks to dump. Many companies have issued disappointing results and lowered their forward guidance, causing their share price to fall.
Some companies that missed on their Q2 earnings are facing long-term structural problems or other issues that are not likely to be resolved anytime soon, making them stocks to sell after their Q2 results. Get out Now! Here are seven stocks to dump after sorry Q2 earnings.
Pfizer (PFE)
Drug maker Pfizer (NYSE:PFE) just reported disappointing second-quarter results due to plummeting sales of its Covid-19 vaccine.
The company announced Q2 revenue of $12.73 billion, which was down 54% from a year earlier. Excluding sales of its Covid-19 vaccine and Covid-19 antiviral pill Paxlovid, revenue at Pfizer actually rose 5% year-over-year during Q2. Sales of Pfizer’s Covid-19 medications totaled $1.6 billion in the quarter, down 90% from $16.9 billion a year ago.
Pfizer managed to post earnings per share of 67 cents, which beat consensus forecasts for 57 cents among analysts who cover the company. However, the company lowered its 2023 sales forecast to a range of $67 billion to $70 billion, down from $67 billion to $71 billion previously.
Pfizer reiterated its full-year earnings outlook of $3.25 to $3.45 per share and said that a robust pipeline of new medications should help it find new areas for future growth. PFE stock has declined nearly 30% year to date with no rebound within sight, which is why it’s among the stocks to dump now.
BP (BP)
Like most oil majors, British Petroleum (NYSE:BP), commonly known as “BP,” reported a significant reversal of fortune in Q2 of this year.
The London-based company reported a Q2 net profit of $2.6 billion, which was down 69% from $8.5 billion a year earlier. Analysts had forecast a Q2 profit of $3.5 billion, according to Refinitiv data.
BP said the poor results were because of lower prices for crude oil and natural gas during the April-through-June period, as well as lower refining margins which is one of the reasons it’s on this stocks to dump list.
Despite the Q2 earnings downturn, or perhaps because of it, BP announced that it is raising its quarterly dividend by 10% to 7 cents a share.
The company also said it plans to repurchase $1.5 billion of its own stock in the current third quarter. BP is the latest oil producer to report lower year-over-year earnings coming off record prices for crude oil throughout 2022.
For all of last year, BP reported a record annual profit of $27.7 billion as the price of crude oil peaked at $122 a barrel. BP’s stock is up 8% year to date, but has fallen 16% over the last five years.
Centerra Gold (CGAU)
Centerra Gold (NYSE:CGAU) just reported a Q2 net loss of -$39.7 million, which is 1,426% greater than a loss of -$2.6 million a year earlier. Ouch!
Company President Paul Tomory said during an earnings call with analysts and media that a review of the company’s assets is now underway with plans to maximize shareholder value.
This has led to speculation that the Canadian gold miner might put itself up for sale in coming weeks.
Despite the steep quarterly decline, Centerra Gold managed to announce that its revenue for the quarter ended June 30 rose 10% to $184.5 million from $167.7 million in Q2 of last year.
The company said it produced 61,622 ounces of gold in Q2, up 44% from 42,729 ounces during the same quarter of 2022, and said that it has received approval from the Turkish environment ministry to restart full operations at its Oksut Mine site.
CGAU stock fell nearly 5% on the Q2 print, bringing the share price down 2% over the last 12 months, making it one of the stocks to dump while you still can.
Domino’s Pizza (DPZ)
Domino’s Pizza (NYSE:DPZ) is another company that reported mixed, though largely disappointing, second-quarter results.
The world’s largest pizza chain said its revenue during Q2 fell 3.8% to $1.02 billion compared with consensus analyst estimates of $1.07 billion. EPS in the quarter came in at $3.08, which was slightly above estimates of $3.05.
Domino’s said higher prices and delivery fees hurt demand for its menu items that include pizza and chicken wings.
The company said that its same-store sales rose 0.1% in Q2, which was below Wall Street’s forecast for growth of 0.2%.
To help boost its deliveries, Domino’s recently announced a new partnership with Uber (NYSE:UBER) that will allow consumers to place pizza orders on the ride-sharing company’s food delivery apps “Uber Eats” and “Postmates.”
While some analysts have praised the Uber partnership, it will take time before the deal has an impact on Domino’s results. DPZ stock is essentially flat (up 2%) over the last 12 months.
Chipotle Mexican Grill (CMG)
Shares of Chipotle Mexican Grill (NYSE:CMG) fell 10% immediately after the quick service restaurant chain posted Q2 earnings and guidance that let down analysts who cover the company.
Chipotle, which specializes in Mexican cuisine, announced Q2 EPS of $12.65 versus $12.31 that had been expected among analysts. Revenue in the quarter came in at $2.51 billion, which was below the consensus expectation of $2.53 billion.
The company said that higher prices for tortillas, dairy, beef, and other ingredients hurt Q2 profits.
The company’s same-store sales grew 7.4% in Q2, falling short of Wall Street estimates for growth of 7.5%.
Earlier this year, Chipotle said it was done raising menu prices after hiking them previously to offset rising labor and commodity costs. The company may want to reconsider its position on pricing.
Especially after saying that, for the current third quarter, its anticipates same-store sales growth in the low-to-mid single digits. That fell short of Wall Street forecasts for Q3 same-store sales growth of 5.9%.
CMG stock remains down 8% since its Q2 earnings were announced. The stock is up 25% over the last 12 months.
Canadian National Railway (CNI)
Not all railway companies are equal. Case in point, Canadian National Railway (NYSE:CNI).
The company, which traverses the U.S. and Canada, reported that its Q2 net income fell by 12% to $1.17 billion from $1.33 billion a year earlier.
The rail operator said that its revenue in Q2 declined 7% to $4.06 billion from $4.34 billion in the same quarter of 2022. CN Rail, as the company is commonly known, announced EPS of $1.76, down 9% from $1.93 a year ago. That result was below the $1.82 that analysts had expected.
Adding to the poor Q2 results, CN Rail also lowered its forward guidance for the rest of this year, saying it expects flat to negative earnings for all of 2023 instead of mid-single-digit growth announced previously.
The company blamed both the poor showing and lowered outlook on a slowing North American economy. Disruptions caused by wildfires and a nearly two-week strike at ports on Canada’s West Coast have been adding to the railway’s problems. CNI stock has declined 5% over the last 12 months.
Taiwan Semiconductor Manufacturing Co. (TSM)
Taiwan Semiconductor Manufacturing Co. (NYSE:TSM) laid an egg with its Q2 print. The world’s biggest chip maker and foundry posted its first profit decline in four years for the April to June period as demand for consumer electronics weakens around the world.
The microchip and semiconductor fabrication company announced Q2 revenue of 480.84 billion New Taiwan dollars ($15.68 billion U.S.), which was down 10% from a year earlier and below Wall Street consensus expectations.
Taiwan Semi also reported net income that was 23% lower than a year ago. The results were the company’s first quarterly net income decline since Q2 2019. TSM is the top producer of the world’s most advanced microchips, semiconductors, and processors, accounting for 60% of the world’s supply.
That its Q2 results fell came as a surprise given the explosion in artificial intelligence applications. However, the company said demand for consumer electronics remains weak post-pandemic. TSM stock has gained 14% over the last 12 months.
On the date of publication, Joel Baglole did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
