Editor's pick: This article was originally published March 18.
Corporate earnings fell short of Wall Street estimates for approximately 20% of S&P 500 companies during the fourth quarter, according to S&P Global Markets Intelligence. In fact, some companies' quarterly EPS did not come even close to analysts' expectations, despite downward estimate revisions leading up to reported results.
With the majority of fourth-quarter S&P 500 earnings reports now complete, "the drag from oil prices has clearly played a role in the disappointing quarterly results," Lindsey Bell, a senior analyst at S&P Global Markets Intelligence, wrote last week. S&P Global Markets Intelligence is a division of McGraw Hill Financial.
"Less discussed this quarter has been the impact of the U.S. dollar on corporate earnings," she said. "S&P Global Market Intelligence believes the dollar's climb shaved an estimated 6-8 percentage points off top line growth, ultimately leading to a 7% reduction in earnings for the S&P 500."
With two companies still left to report (GameStop (GME - Get Report) and PVH (PVH - Get Report) ), fourth-quarter EPS for the S&P 500 is currently $29.28, surpassing expectations by about 135 basis points -- but still down by 4.2% over the previous year, according to S&P Global Markets. On the bright side, approximately 65% of S&P 500 companies have surpassed earnings estimates. (The data does not include Tiffany (TIF - Get Report) , which reported quarterly results early Friday.)
Indeed, it was a weak quarter, according to Bell. "The size of the beat was a lot smaller than it has been in a long time, [considering] estimates were cut significantly going into the quarter," she said in a telephone interview.
Overall, analysts had reduced estimates by 508 basis points from the start of the fourth quarter in October through mid-January. That was well above the average earnings estimate revisions of about 350 basis points, signifying "analysts' uncertainty going into earnings season," Bell wrote in the note.
The companies that were the worst offenders when it came to earnings misses did not manage investors' expectations well enough, Bell noted.
S&P Global Markets Intelligence provided normalized fourth-quarter earnings-per-share figures and consensus estimates (as calculated by the firm) for S&P 500 companies. Normalized earnings per share are adjusted for items the analysts deem one-time in nature.
Here are the 10 S&P 500 companies that had the worst quarterly EPS misses last quarter.
Fourth-Quarter EPS Estimates: $1.01
Fourth-Quarter EPS Actual: 77 cents
GAAP EPS: loss of 9 cents
Missed By: 24.1%
Expedia (EXPE - Get Report) operates as an online travel company in the U.S. and internationally. It facilitates the booking of hotel rooms, airline seats, car rentals and destination services from its travel suppliers and acts as an agent in the transaction. The company is headquartered in Bellevue, Wash.
For the fourth quarter, the online travel company missed consensus estimates by 24 cents, or 24.1%. Per-share earnings were down 10.5% from the year-earlier period, in which Expedia reported earnings of 86 cents a share, according to S&P Global data.
Expedia has been very acquisitive. The company spent $6 billion on bulking up its offerings in 2015 to ward off competitors such as Airbnb and Priceline (PCLN) , according to Bloomberg, most notably with the acquisitions of Orbitz and HomeAway, a vacation rental marketplace. The strong dollar also put pressure on Expedia's revenue.
That said, the growing company boosted its 2016 guidance, forecasting adjusted earnings before interest, taxes, depreciation and amortization to grow to $1.57 billion to $1.69 billion, compared with $1.2 billion in 2015, Bloomberg said.
TheStreet's Jim Cramer, co-manager of the Action Alerts PLUS portfolio, recently offered positive comments on CNBC's "Stop Trading" regarding Expedia's acquisition of vacation rental marketplace HomeAway.
"HomeAway, when it was run independently, did not do enough. Expedia's going to do it," Cramer said on March 10. "I love this stock -- love, love, love."
Fourth Quarter EPS Estimates: 49 cents
Fourth Quarter EPS Actual: 37 cents
GAAP EPS: 37 cents
Missed By: 24.1%
Ventas (VTR - Get Report) is a publicly owned real estate investment trust. The Chicago-based firm invests in U.S. and Canadian health-care-related facilities, including hospitals, skilled nursing facilities, senior housing facilities, medical office buildings and other health care related facilities.
For the fourth quarter, the health care REIT missed consensus estimates by 12 cents, or 24.1%. Per-share earnings were up 2.8% from the year-earlier period, in which Ventas reported earnings of 36 cents a share, according to S&P Global data.
Ventas' profit jumped in the final quarter of the year due to mergers and acquisitions, even though earnings missed expectations. Still the health care REIT said that funds from operations -- a key measure for REITs to determine shareholder payouts -- was $346.3 million, or $1.03 a share, for the fourth quarter, 2 cents a share higher than what analysts were expecting.
The company made $5.2 billion in acquisitions for all of 2015. It also completed the spinoff of Care Capital Properties (its skilled nursing facility portfolio) and acquired Ardent's hospital real estate network.
TheStreet's Jim Cramer, co-manager of the Action Alerts PLUS portfolio, said he likes the stock on the CNBC's Mad Money. "Not all REITs or health care REITs are created equal. Some are better than others," he said.
Fourth Quarter EPS Estimates: $1.57
Fourth Quarter EPS Actual: $1
GAAP EPS: $1
Missed By: 36.3%
Amazon.com (AMZN - Get Report) is known for its retail sale of consumer products and proprietary electronics in North America and internationally. The Seattle-based tech giant also offers compute, storage, database and other AWS services, as well as fulfillment, publishing, digital content subscriptions, advertising and co-branded credit card agreements services.
For the fourth quarter, the online retail giant missed consensus estimates by 57 cents, or 36.3%. Per-share earnings were up 122% from the year-earlier period, in which Amazon reported earnings of 45 cents a share, according to S&P Global.
Amazon's sales growth has been impressive, to say the least. Holiday sales jumped 22% year over year to $35.7 billion. Amazon Web Services also beat sales estimates, coming in at $2.41 billion vs. estimates of $2.38 billion.
But Wall Street expectations for its bottom line were perhaps too high. "Investors had gotten used to a more reliable earnings stream given the earnings beats of the previous two quarters," according to TheStreet contributor Jane Edmondson.
Fourth Quarter EPS Estimates: $1.55
Fourth Quarter EPS Actual: 97 cents
GAAP EPS: 97 cents
Missed By: 37.4%
For the fourth quarter, the insurer missed consensus estimates by 58 cents, or by 37.4%. Per-share earnings were up 11.5% from the year-earlier period, in which Assurant reported earnings of 87 cents a share, according to S&P Global data.
Assurant is in the process of exiting the health insurance market to focus its operations more on housing and lifestyle specialty protection offerings, the company announced in June 2015. The company also completed the sale of its employee benefits business to Sun Life Assurance Company of Canada.
"Looking ahead, Assurant intends to focus on housing and lifestyle businesses growth opportunities via a more integrated, agile, and cost-efficient operating model, which in turn should generate a more diversified and sustainable earnings stream as well as strong cash flows to support its capital deployment strategy," Wells Fargo Securities analyst John Hall wrote in a March 8 research note, following Assurant's investor day.
Fourth Quarter EPS Estimates: 51 cents
Fourth Quarter EPS Actual: 27 cents
GAAP EPS: loss of 31 cents
Missed By: 46.8%
Chevron (CVX - Get Report) engages in integrated energy, chemicals and petroleum operations worldwide. The company's upstream segment is involved in the exploration, development and production of crude oil and natural gas. The downstream segment engages in refining crude oil into petroleum products.
For the fourth quarter, the oil and gas conglomerate missed consensus estimates by 24 cents, or 46.8%. Per-share earnings were down 85.4% from the year-earlier period, in which Chevron reported earnings of $1.85 a share, according to S&P Global data.
Chevron is getting hammered by the plunging oil prices. The company posted its first loss since 2002 for the fourth quarter.
"Our 2015 earnings were down significantly from the previous year, reflecting a nearly 50 percent year-on-year decline in crude oil prices," Chairman and CEO John Watson said in the company's earnings statement.
Chevron cut its 2016 expenditure budget by 24% to $26.6 billion in January and said it plans for further asset sales this year and next year on top of the $6 billion it had in 2015.
Last week, Chevron further slashed its capital expenditure budget by nearly 40% for both 2017 and 2018 to address oil prices. The company said it plans to spend between $17 billion and $22 billion on drilling and related projects in the two years. That's lower than the $20 billion to $24 billion it expected to previously spend, according to the Associated Press.
Fourth Quarter EPS Estimates: 45 cents
Fourth Quarter EPS Actual: 23 cents
GAAP EPS: a loss of $4.06
Missed By: 48.3%
National Oilwell Varco (NOV - Get Report) designs, manufactures and sells equipment and components used in oil and gas drilling, completion and production operations. It also provides oilfield services to the upstream oil and gas industry worldwide. The company is headquartered in Houston.
For the fourth quarter, National Oilwell Varco missed consensus estimates by 22 cents, or 48.3%. Per-share earnings were down 86.4% from the year-earlier period, in which the company reported earnings of $1.69 a share, according to S&P Global data.
Another company getting slammed by lower oil prices, National Oilwell Varco's fourth-quarter revenue slid 52% to $2.72 billion from the year-earlier quarter. The Houston-based company's GAAP net loss for the quarter was $1.5 million, or $4.06 a share.
"Our team executed well in 2015 in a very tough market. Tumbling oil prices brought capital austerity and sharply lower oilfield activity, which is intensifying as we enter 2016," National Oilwell Varco's Chairman and CEO Clay Williams said in the earnings statement. "Nevertheless, our consolidated revenue outperformed the decline in global rig count, and our cost reductions and operational efficiencies enabled solid cash generation. Together with our strong balance sheet, this allowed us to invest in our business for future growth, as well as return significant capital to our shareholders. We are well positioned to take advantage of the opportunities we expect to emerge during 2016."
Tudor, Pickering, Holt described National Oilwell Varco's earnings results as the "most challenging quarter in some time," reflecting the "harsh reality" of exploration and production companies that need to put the brakes on spending, according to the Houston Chronicle.
The quarter was "much worse than we envisioned," the analysts wrote.
Fourth Quarter EPS Estimates: 61 cents
Fourth Quarter EPS Actual: 25 cents
GAAP EPS: loss of 58 cents
Missed By: 58.6%
Loews (L - Get Report) is a diversified company. It operates a commercial property and casualty insurance company in the U.S. under CNA Financial (CNA - Get Report) . In addition, through Diamond Offshore Drilling (DO - Get Report) , the company owns and operates 32 offshore drilling rigs consisting of 23 semisubmersible rigs, five jack-ups and four drillships for companies engaged in the exploration and production of hydrocarbons. Further, it is involved in the transportation and storage of natural gas and natural gas liquids, and gathering and processing of natural gas through its Boardwalk Pipeline (BWP) subsidiary. Additionally, it operates 24 hotels in the U.S. and Canada under the Loews hotel chain.
For the fourth quarter, Loews missed consensus estimates by 36 cents, or 58.6%. Per-share earnings were down 39% from the year-earlier period, in which Loews reported earnings of 41 cents a share, according to S&P Global data.
Despite its diversification, the company took an after-tax charge of $177 million related to the long-term care business of CNA Financial. As well, Diamond Offshore Drilling took asset impairment charges of $182 million in the quarter, according to its earnings release.
"The reality for offshore drilling companies is stark," CEO James Tisch told Bloomberg on Feb. 8. "The drop in oil prices is causing oil companies to slash exploration and development budgets and reduce or cancel drilling contracts, decimating day rates and idling rigs. The market for rigs of all types, including new, ultra-deepwater drill ships, is currently, and will for the immediate future, be drastically oversupplied."
Fourth Quarter EPS Estimates: $1.17
Fourth Quarter EPS Actual: 47 cents
GAAP EPS: loss of 18 cents
Missed By: 60.1%
For the fourth quarter, Equinix missed consensus estimates by 70 cents, or 60.1%. Per-share earnings were down 16.9% from the year-earlier period, in which Equinix reported earnings of 56 cents a share, according to S&P Global data.
Equinix reported funds from operations -- a key measure for REITs to determine shareholder payouts -- of $178.3 million, or $2.85 a share, missing estimates of $3.51 a share.
Equinix said that its funds from operations result was "negatively affected in the quarter by a $49 million foreign currency exchange loss, primarily because of the Telecity purchase," according to The Motley Fool.
Equinix is currently digesting two strategic acquisitions. It completed its purchase of London-based Telecity for $3.8 billion in January, which more than doubles Equinix's capacity in Europe. It also acquired Bit-isle in December 2015, which strengthens its position in Japan and Asia-Pacific, the company's fastest growing region, it said.
Fourth-quarter earnings "were strong, but merger synergy and acquired assets growth expectations were below our expectations and we had lowered estimates," Oppenheimer analyst Timothy Horan wrote in a note to clients this week in which he downgraded the stock to perform from outperform.
"2015 was a transformational year for Equinix. We delivered accelerated growth, expanded our global platform with two strategic acquisitions, completed our first year operating as a REIT, and established ourselves as the foundation for the cloud ecosystem that continues to drive IT transformation," CEO Steve Smith said in the company's earnings release. "The strength of our business is translating into solid revenue growth, firm yield and healthy margins, all of which combine to give us the financial firepower to continue to invest in our global platform, develop innovative solutions, and continue to deliver significant value to our shareholders."
Fourth Quarter Estimates: 14 cents
Fourth Quarter Actual: 4 cents
GAAP EPS: loss of 50 cents
Missed By: 70.7%
For the fourth quarter, Newmont Mining missed consensus estimates by 10 cents, or 70.7%. Per-share earnings were down 76.5% from the year-earlier period, in which Newmont Mining reported earnings of 17 cents a share, according to S&P Global data.
The company has been hurt by falling gold prices. However, the company responded to the prolonged slump in gold prices by expanding, according to Bloomberg. (Shares have been rising recently due to gold prices rallying.)
Newmont agreed in June of last year to acquire the Cripple Creek & Victor mine in Colorado for $820 million. In October, the company said it was expanding its Tanami operations in Australia.
"We continue to offer Newmont Mining as equity that appears poised to better reflect overall capital discipline, cost performance and positive moves during the past 18 months to upgrade its asset portfolio. As gold finds new, higher levels, Newmont should outperform," Sterne Agee CRT analyst Michael Dudas wrote in a Feb. 18 note to clients.
Newmont's fourth-quarter results missed estimates on "lower mill grades at Yanacocha and Ahafo, and delayed sales from Batu Hijau due to export permit delays," Dudas wrote. In addition, gold cash costs "came in at $680/oz vs. our $630/oz estimate and 3Q15 cash cost of $608/oz)."
Fourth Quarter Estimates: 11 cents
Fourth Quarter Actual: 1 cent
GAAP EPS: loss of 94 cents
Missed By: 93.8%
Williams Cos. (WMB - Get Report) and Williams Partners (WPZ) own and operate energy infrastructure across North America, including the largest-volume and fastest-growing interstate pipeline system in the U.S., connecting the best supplies of natural gas and natural gas products to the best markets, according to its Web site.
For the fourth quarter, Williams Cos. missed consensus estimates by 15 cents, or 93.8%. Per-share earnings were down 94% from the year-earlier period, in which Williams Cos. reported earnings of 16 cents a share, according to S&P Global data.
Sharply lower commodities prices were the culprit, taking a bite out of Williams' fourth-quarter results.
"Williams Partners recorded another strong quarter, demonstrating excellent operational performance and the resilience of our business to grow despite sharply lower commodity prices," Alan Armstrong, Williams' chief executive, said in the Feb. 17 earnings release. "Even with reduced activities in supply areas, the partnership enjoyed continued growth in fee-based revenues primarily from demand-driven projects and expansions brought into service."
More important, though, the collapse in oil prices has potentially put the merger between Energy Transfer Equity (ETE) and Williams in jeopardy.
Last September, Energy Transfer had planned to acquire Williams for $38 billion, or $43.50 a share. However, Bloomberg noted that Williams' shares have fallen about 61% since the deal was announced, while Energy Transfer's units have declined about 71%.