Not-So Smart Balance
Somebody should sue butterlike spread-maker Smart Balance (SMBL) for false advertising. Not only is the company's management proving itself to be anything but smart, but the imbalance of sell vs. buy orders is causing its stock to topple.
Shares of Smart Balance got schmeared Tuesday, falling 24% to $3.91 after the company cut its 2010 sales outlook due to a soft economy. Smart Balance management says it now expects sales to rise between 2% and 4%, down from prior guidance of growth in the mid-teens.
Ouch! That's quite a forecast reduction. No wonder why traders cut through the company's share price like a hot knife through a butter substitute.In a statement, Chairman and CEO Stephen Hughes laid it on thick, saying, "The past two months have been particularly challenging, as consumer price sensitivity and very aggressive promotional activity in the spreads category have put pressure on our results." Hughes added that the company is enjoying success with its new milk products. The announcement caught Wall Street traders off guard because the company previously gave no hint of such a dramatic slowdown. The stunning revelation caused Key Banc Capital Markets analyst Akshay Jagdale to remark that Smart Balance may be "spread too thin." We could not have said it better ourselves. Dumb-o-meter score: 75 -- We think Hughes is milking the downturn excuse to hide the fact that competitors are eating away at his spread business.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
24/7 market commentary from Jim Cramer and 20+ veteran Wall Street gurus. Get access to the latest trading ideas on stocks, options, and ETFs as well as a real-time forum to see the pros exchanging their investment ideas.
- Jim Cramer + 20 Wall Street pros
- Intraday commentary & news
- Real-time trading forum
- Actionable trade ideas
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV