A string of subpar second-quarter earnings reports is hurting the stock market. The technology-laden Nasdaq index fell 3% (more than 500 points) after the initial financial results from mega-cap tech companies disappointed. However, the poor results are by no means limited to technology concerns.
Restaurants, airlines, healthcare companies and some financial institutions have delivered earnings disappointments since the start of July, contributing to the market volatility that has characterized the start of the year’s second half. The poor financial results have also exposed companies that are struggling under the weight of big problems and are likely to continue doing so over the near term.
Here are three stocks to sell after disastrous Q2 earnings.
Tesla (TSLA)
As these words are being typed, Tesla’s (NASDAQ:TSLA) stock is down 10% after the electric vehicle manufacturer reported terrible second-quarter financial results. The company announced EPS of 52 cents versus 62 cents, which was expected among analysts. Revenue in the quarter totaled $25.50 billion, which was a little ahead of Wall Street forecasts of $24.77 billion. However, Tesla reported that its revenue from electric vehicle sales declined 7% year-over-year to $19.90 billion.
Equally bad, Tesla reported that its profit margin declined to 14.4% from 18.7% a year earlier. CEO Elon Musk said that Tesla continues to struggle with declining sales and rising competition, especially in China, its second biggest market. As a result, Tesla continues to lower prices and offer discounts on its vehicles, which has hurt the company’s finances and margins. Earlier this year, Tesla’s share of the U.S. electric vehicle market fell below 50% for the first time, continuing a downward trend.
TSLA stock has declined 18% over the last 12 months.
AT&T (T)
AT&T’s (NYSE:T) Q2 print wasn’t much to like. The telecommunications giant’s results fell short of Wall Street estimates due to a decline in its fiber-optic business. The company reported an EPS of 57 cents, which aligned with Wall Street forecasts but was down 10% from a year earlier. Revenue came in at $29.80 billion, down 0.4% from a year earlier and slightly below estimates that called for sales of $29.98 billion.
While AT&T reported its second consecutive quarter of better-than-expected landline phone subscribers, it continues to see an erosion in its fiber-optic internet unit. The company added 239,000 fiber-optic customers in Q2, which was below the 248,600 analysts had forecast. The company maintained its full-year guidance, calling for earnings of $2.15 to $2.25 per share and broadband revenue growth of about 7%.
T stock has been a chronic underperformer, down 26% over the last five years.
Visa (V)
Credit card giant Visa (NYSE:V) posted uncharacteristically bad Q2 results, sending its stock down 4%. The company announced an EPS of $2.42 for its fiscal third quarter, matching Wall Street forecasts. Revenue of $8.90 billion was slightly below analyst estimates of $8.92 billion. Visa said that its payment volume rose 7% while its processed transactions increased 10%.
Unfortunately, those numbers were down from 8% growth in payment volumes and 11% growth in processed transactions in the previous quarter. Despite the disappointing results and slowdown, Visa reiterated its forward guidance that calls for full-year double digit revenue growth. V stock is up 6% over the last 12 months, trailing the 20% gain in the benchmark S&P 500 index during the same period.
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.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
