Things are fat in earnings land these days. Over half of the companies in the S&P 500 have already reported their third-quarter results, and so far about 80% of them have exceeded analysts’ expectations. The earnings strength can be found in a variety of market segments, including financials, industrials and technology. High-profile companies such as Goldman Sachs (NYSE: GS), Caterpillar (NYSE: CAT) and Apple (NASDAQ: AAPL) all have handily bested quarterly expectations. Yet despite the bevy of well-known earnings beats, there have been a number of high-profile earnings misses that just may give investors cause for concern.
The most recent big-name earnings misses came on Monday, when oil and gas drilling company Anadarko Petroleum (NYSE: APC) reported a net loss of $26 million, or 5 cents a share, included after-tax charges totaling $129 million. The company, which owns a minority stake in British Petroleum’s (NYSE: BP) ruptured Gulf oil well, said third-quarter revenue fell 11% to $2.55 billion from the prior year. The Street was expecting earnings of 28 cents a share on revenue of $2.65 billion.
Late last week, oil giant Chevron Corp. (NYSE: CVX) reported a slide in income in Q3 that it attributed to costs related to the Gulf of Mexico drilling moratorium. Chevron said it earned $3.77 billion, or $1.87 per share, for the three months ended Sept. 30. That compares with $3.83 billion, or $1.92 per share, in the year-earlier period. The Street was anticipating EPS of $2.15 per share.
Oil companies aren’t the only losers so far in Q3. Technology company Corning (NYSE:
GLW) posted an earnings jump of 22% in the third quarter; however, despite the growth the numbers missed expectations. The company saw revenue of $1.60 billion, and adjusted EPS of 51 cents a share. Both metrics were below analysts’ forecasts for $1.61 billion, and 52 cents per share.
Another tech company falling short of estimates was business software maker SAP AG (NYSE: SAP). The company reported a 12% year-over-year increase in Q3 earnings, but that still failed to live up to estimates. The company said it earned €501 million in the quarter, which was below the predicted profit of €553 million.
Consumer products maker Kimberly-Clark (NYSE: KMB) also had a tough Q3, earning $469 million, or $1.14 per share, which was down from $582 million, or $1.40 per share, in the same quarter a year earlier. The consensus forecast for Kimberly-Clark was for earnings per share of $1.28. The company followed up the disappointing quarter with a lowered full-year profit forecast.
Consumer retailer Avon Products (NYSE: AVP) saw a 7% rise in third-quarter income, but that wasn’t enough to satisfy Wall Street. The beauty-products maker said income rose to $166.7 million, or 38 cents per share, from $156.2 million, or 36 cents per share, in the same quarter last year. Adjusted earnings came in at 41 cents per share, well below analysts’ expectations for 47 cents per share. Revenue rose 4% to $2.66 billion, but that was below anticipated revenue of $2.69 billion.
Diesel engine maker Cummins (NYSE: CMI) reported third-quarter profit that nearly tripled. Cummins said it earned $283 million, or $1.44 a share, in the third quarter. That number is up from the $95 million, or 48 cents a share, it earned in the same quarter a year earlier. Sales actually rose to $3.4 billion from $2.53 billion, thanks to strength in international markets. Despite the hefty earnings, the company fell short of the $1.58 per share Wall Street was expecting, and the $3.91 billion in anticipated sales.
In a related earnings miss, trucking and logistics company JB Hunt Transport Services (NASDAQ: JBHT) reported year-over-year Q3 revenue gains of 18%. The company posted revenue of $986 million, which actually matched estimates. However, the bottom line EPS of 43 cents per share missed estimates by a penny.
While it is true that there have been far more earnings beats this quarter than earnings misses, that fact actually makes these earnings misses even more significant. If you can’t best estimates when everyone else does, then when can you beat the Street?
As of this writing, Jim Woods did not own a position in any of the stocks named here.
