4. Welcome to the Woodshed

Shares of decking products maker Trex ( TREX) got decked on Tuesday, while hardwood flooring retailer Lumber Liquidators ( LL) stock got liquidated last Thursday.

Why did both companies get taken to the woodshed? Simple. Because their management acted like a bunch of blockheads by giving far-from-conservative guidance to Wall Street.

Trex shares tumbled after the company made a deep cut to its revenue outlook. It now sees revenue of $78 million for its fiscal second quarter ended in June, more than 30% below its previous forecast of $115 million.

The company, whose products typically cost more than using wood but require less maintenance, cited poor weather and weak economic conditions for the view, which was well below Wall Street's current consensus estimate for revenue of $113.9 million.

"Many parts of the country experienced major winter storms through April, which were then followed by heavier-than-normal precipitation during most of May, further delaying the start of the decking season," said Ronald Kaplan, the company's president, chairman and CEO in a press release.

Thanks for the back-cast Ron. But Wall Street analysts base their estimates on your forecast. They don't need a weatherman to know which way the wind blew.

Investors should get ready for a huge downdraft of earnings revisions and target prices, because when you overpromise and underdeliver then Wall Street tends to blow you away.

Same goes for Lumber Liquidators which pre-announced lower earnings and revenues last Thursday, sending its shares down 29%. Lumber Liquidators now anticipates second-quarter earnings of 18 to 20 cents per share when it reports results on July 26. Analysts expected earnings of 31 cents prior to the warning.

CEO Jeffrey Griffiths said unexpected softening in consumer demand hurt second-quarter sales as "value-conscious consumers became more price sensitive and cautious in their discretionary spending."

Thankfully he wasn't silly enough to blame the weather or we would have made him walk the plank. But it still didn't stop investors from yelling "Timber!," taking a buzzsaw to his stock and reducing it to kindling. (Okay! We'll stop with the wooden analogies...Damn! Ok! Now we'll stop.)

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