The Broad Markets Soared, but These Companies Missed the Boat
Jul 27th 2012 9:11PM
Updated Jul 27th 2012 9:18PM
After a slow start to the week, the Dow Jones Industrial Average (INDEX; ^DJI) soared, and finished above the 13,000 point mark, the highest finish since early May. Two trends can sum up the past week -- increased investor confidence after the ECB and European political leaders declared full backing of the EU, and an increasingly volatile earnings season. The Dow climbed 3.7% after Mario Draghi, the ECB's President, made the banks intentions known, promising to increase eurozone banking liquidity.
Source: Yahoo! Finance
Although the broad markets turned in one of the better weeks so far in 2012, a contingent of companies did not have tickets to the rally and, instead, turned significantly lower.
The Class Clowns Source: Yahoo! Finance
Cliffs Natural Resources (NYS: CLF) finished the week down a lofty 11.6%, after the punishment investors dished out to the company for missing second quarter revenue estimates. The coal industry has been kicked in the teeth this past year, depressing every company in the sector, and Cliffs was no exception. The company's United States Iron Ore sales decreased in the second quarter, hurting the top and bottom lines, as this segment accounts for more than 50% of the company's revenue.
The past week was jam packed with excitement coming from the technology sector, as Apple, Google, Baidu, and many more released earnings. However, the two soar thumbs were TripAdvisor (NAS: TRIP) and Netflix (NAS: NFLX) .
TripAdvisor lost 20% of its market cap this past week, as it, too, suffered from a dismal second quarter. The Expedia spinoff missed analyst estimates on revenue recording $197.1 million, and met earnings per share estimates of $0.41. The travel website company pointed to the weak economy and the credit crisis in Europe as causes for the slow quarter.
Netflix scrambled on Friday to make up some lost ground, after dropping 20% when the streaming entertainment company reported earnings on Tuesday. The company only added 1.1 million subscribers over the last quarter, almost 50% less than the year before quarter. Earnings came in at $6.2 million, or 11 cents per share, 91% less than last year's quarter, where earnings came in at $68 million, or $1.26 per share.
DeVry (NYS: DV) had the worst week of any company in the S&P 500, dropping 28%, as for-profit education continues to slide. Enrollment at for-profit colleges has tanked after admission policies became more stringent in an attempt to reduce student debt. DeVry slashed its fourth-quarter outlook this week, as enrollment is expected to keep decreasing, and earnings are affected by increasing the number of scholarships offered to offset the tighter financial aid packages.
Think long term
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The article The Broad Markets Soared, but These Companies Missed the Boat originally appeared on Fool.com.Joel South owns shares of no company listed above. The Motley Fool owns shares of Netflix and TripAdvisor. Motley Fool newsletter services have recommended buying shares of Netflix and TripAdvisor. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.
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