Five Companies That Recently Cut Guidance
Executives regularly announce projections for their companies' future financial results. These projection announcements are called management guidance.
Downward revisions of previously issued guidance likely signal that management has a gloomy outlook on a company's future. Resultantly, downward guidance revisions often trigger share price declines.
Investors might view a downward guidance revision as an occasion to sell a stock, since management has a negative outlook. Or, investors might view a downward guidance revision as a chance to purchase shares cheaply when other market participants have lost hope.
Below are five companies that have decreased management guidance in June.
EnergySolutions (NYSE: ES): EnergySolutions plummeted around 50% on June 11 after announcing that it softened its outlook for 2012. The company downgraded its EBITDA guidance to a range of $130 to $140 million from $150 to $160 million. This downward revision was due to a slowdown in shipments to both government and commercial business, the delay of a project and slower planned cost savings.
Also on June 11, EnergySolutions appointed David Lockwood as CEO and president of the company. Lockwood commented, “We have a lot of work ahead of us, but we also have extraordinarily talented engineers and scientists and deep industry experience. These are fundamental strengths upon which we will build our future.”
Lockwood added, “I look forward to working closely with my fellow directors, Greg, and our proven and experienced operating management team to help EnergySolutions realize its full potential.”
EnergySolutions traded down around 1.2% for the day.
Ballard Power System (NASDAQ: BLDP): Ballard Power System shares sank Monday after the fuel cell firm cut guidance for 2012 revenue and adjusted EBITDA. The company cut guidance for 2012 revenue from $100 to $85 million and adjusted EBITDA from around breakeven to a loss of $5 million. According to Ballard Power System, the cut resulted from delays to shipping sales orders.
Tuesday, Ballard Power Systems was trading around $0.01 higher than its Monday closing price of $1.12.
Body Central (NASDAQ: BODY): Body Central plummeted Monday after revising guidance for fiscal 2012 second-quarter and full-year results. For second-quarter results, Body Central decreased its expected revenues to a range of $77 million to $79 million. Body Central decreased its expected revenues for the fiscal year 2012 to a range of $323 to $328 million and comparable sales decrease to a range of 4% to 6%.
Allen Weinstein, Body Central's President and CEO, stated: "Our second quarter comparable sales remain soft and have not improved since April. We continue to diligently manage inventory and to take aggressive markdowns on slow moving items.”
Weinstein continued, “Based on these trends and expectations, we have lowered our second half sales plan and revised guidance down accordingly. We continue to believe that we have a compelling business model and are actively working to address near-term sales challenges and get our business back on track."
Tuesday, Body Central recovered somewhat from Monday's more than 40% fall. Shares traded up more than 5% for Tuesday's session.
Scotts Miracle-Gro (NYSE: SMG) shares sank on June 12 after announcing a slash to its estimated earnings per share. The company stated that it expects to fall short of its previous earnings per share range of $2.65 to $2.85 for full-year fiscal 2012. Scotts Miracle-Gro specified that there was a decrease in demand for lawn care goods after an early start to the season in the second quarter. The company detailed that it expects to present the adjusted guidance for 2012 in its third-quarter results.
In a statement, Chairman and Chief Executive Officer Jim Hagedorn noted, “While we remain confident in the long-term growth opportunities in our business, it is clear that near-term category growth has become harder to achieve.”
Hagedorn also noted, “Over the balance of the fiscal year we will pressure test our assumptions and make any necessary adjustments as we plan for the 2013 lawn and garden season.”
Shares of Scotts Miracle-Gro were trading up about 1.5% for the day.
Centene (NYSE: CNC): Shares of healthcare company Centene decreased after the company announced on June 11 that it cut earnings range guidance for 2012. Due to higher then expected medical costs, Centene decreased its diluted earnings per share from to a range of $1.45 to $1.65 from the $2.64 to $2.84 range. The company stated that it expects to experience a loss for full-year fiscal 2012, but expects third-quarter 2012 to be profitable.
Centene traded up around 2.6% Tuesday, but had decreased around 29% year-to-date.
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