My long-time readers know that when push comes to shove, I consider upward revisions to be a powerful indicator of earnings surprises. Unfortunately, the reverse is true as well: Downward earnings revisions are not a good sign because they oftentimes precede upsetting quarterly results. Lately, analysts have been taking a more pessimistic stance on several S&P 500 companies—this has dragged down the consensus estimate for the index in the current quarter. I don’t want anyone to be caught unawares, so I’ve been running the numbers and have isolated 10 of these "slippery slope" stocks. Take a look:
Ten Slippery Slope Stocks
|Symbol||Company Name||Quantitative Grade||Fundamental Grade||Total Grade|
|CLB||Core Laboratories NV||F||C||F|
|DDD||3D Systems Corporation||F||D||F|
|HP||Helmerich & Payne, Inc.||F||C||F|
|LVS||Las Vegas Sands Corp.||F||C||F|
|TIF||Tiffany & Co.||D||C||D|
|TUP||Tupperware Brands Corporation||D||C||D|
|WYNN||Wynn Resorts, Limited||F||D||F|
- Core Laboratories (CLB): Over the past three months, the consensus EPS estimate has fallen from $1.43 to $0.88, a 38% decrease. Core Laboratories is now expected to sell sales plunge 18% and earnings plummet over 36% for the first quarter.
- Coach (COH): In the past 90 days, analysts have reduced their EPS estimate from $0.37 to $0.33. Coach is now headed for a 13.5% year-on-year sales decline and a 48.5% earnings decline.
- 3D Systems Corp. (DDD): The consensus EPS estimate for DDD has plunged 23% in the past two months. Analysts are now calling for 13.3% earnings growth, but given 3D Systems’ poor track record, I don’t expect it to live up to expectations.
- Helmerich & Payne Inc. (HP): The consensus EPS estimate has been in freefall lately, having slipped from $1.49 to $0.82 in just the past 90 days. Helmerich & Payne is headed for a 43.4% year-on-year drop in earnings.
- Las Vegas Sands Corp. (LVS): In the past 90 days, the consensus earnings estimate has slipped from $0.92 to $0.75, a 23% decrease. The consensus estimate calls for a 22.7% earnings decline and a 16.2% sales decline over last year.
- Tiffany & Co. (TIF): Over the past three months, analysts have slashed their consensus earnings estimate by 33%. The analyst community expects Tiffany to see earnings fall nearly 28% compared with the year ago quarter.
- Total SA (TOT): Over the past three months, the consensus earnings estimate has fallen over 33%. Total SA is now expected to see earnings plunge 58% compared with last year.
- TripAdvisor Inc. (TRIP): Analysts have reduced their consensus EPS estimate from $0.67 to $0.60 over the past three months. That represents a 10% decline. TripAdvisor is now expected to post just 11.1% earnings growth, below the industry average. I’d also keep in mind that TripAdvisor has missed analysts’ EPS estimates for the past several quarters in a row.
- Tupperware Brands (TUP): Over the past 90 days, the consensus EPS estimate has slipped 14%. Tupperware is now headed for a 23.7% year-on-year drop in earnings and a 11.8% sales decline.
- Wynn Resorts (WYNN): In the past three months, analysts have slashed their EPS estimates by nearly 40%. Wynn Resorts is expected to see earnings plunge nearly 38% compared with last year. Sales are also expected to fall nearly 19%.
As you can see, there are plenty of household names that are going to have a tough time this earnings season.
Fortunately, there are two easy ways to check out how your holdings are perceived by the analyst community. The first way is to use Portfolio Grader, which includes a letter grade for analyst earnings revisions. If you plug CLB into my stock screening tool, you’ll see that it receives an F for earnings revisions.
There are also several financial news websites which provide the latest earnings estimates for free. I personally like looking at Yahoo! Finance’s analyst estimates page for each stock. Using CLB as our example, you can see that the consensus estimate has been moving around—from $1.43 per share 90 days ago to $0.88 currently.
With these tools at your disposal, there’s no reason not to stay on top of your stocks this earnings season. I encourage you to run all of your holdings through Portfolio Grader to ensure that you’re ready for what’s ahead.