Don’t Get Caught With These Three Stocks Ahead of Earnings Season: Valeant Pharmaceuticals Intl Inc (VRX), Baidu Inc (BIDU), Chipotle Mexican Grill (CMG)
Every quarterly earnings season is filled with both winners and losers. Lately the losers have outpaced the victors, with next season shaping up to be another disappointment. Some of the biggest flops are expected to come from big names including Valeant Pharmaceuticals Intl Inc (NYSE:VRX), Baidu Inc (ADR) (NASDAQ:BIDU) and Chipotle Mexican Grill, Inc. (NYSE:CMG). According to the Estimize data these names are trending downward, owing to negative year-over-year growth estimates, heavy downward revisions and a history of missing expectations. The combination of these factors have typically led to a significant underperformance in the stock.
Valeant Pharmaceuticals Intl Inc
Valeant was one of the best performing stocks on Wall Street in the first half of 2015, but over the past 12 months price gouging initiative have sent shares plunging. After reaching highs of over $250 per share, the stock has plummeted over 90%, to all time lows where it is today. The ongoing freefall forced management to oust now former CEO Michael Pearson, who led the company through the thick of it’s price hikes. WIth several new board members, one being infamous hedge fund manager Bill Ackman, and a new CEO, Valeant is still fumbling. Its most recent report delivered a nearly 50% decline on the bottom-line and 10% on the top. With no signs of improving anytime soon, the upcoming quarter is shaping up to be another disaster. The Estimize consensus is calling for earnings per share of $1.72 on $2.55 billion in revenue. That projects as a 36% decline on the bottom-line and 8% on the top on a year-over-year basis.
Baidu Inc (ADR)
Investors are slowly losing hope that Baidu will ever come close to Google’s success in the United States. The oft referred to Google of China is coming off of its worst quarterly report in nearly 8 years. Earnings reported a 39% decline from the same period last year while revenue dipped nearly 10% over the same timeframe. Baidu’s struggles in the second quarter were primarily driven by sluggish search advertising revenue. This downturn is expected to carry on through the third quarter and the rest of fiscal 2016. Analysts at Estimize are calling for earnings per share of 96 cents on $2.711 billion in revenue. Compared to a year earlier, this represents a 30% decline on the bottom-line and 6% on the top.
Chipotle Mexican Grill, Inc.
Chipotle is still having trouble getting out from under the numerous health outbreaks starting in late 2015. The burrito chain which was once heavily praised as revolutionizing the fast casual sector is now largely an afterthought to a catalogue of other food chains, one being Shake Shack. Amidst the turmoil, earnings and traffic trends have taken a dramatic downturn. Last quarter comparable restaurant sales decreased a 3.6% on a 16.6% decline in total revenue. In an effort to regain customers, Chipotle has hit the ground running with new promotional campaigns and marketing initiatives. Some of these include Chiptopia which rewards customers for frequent visits throughout the summer. More recently, the company launched free kid’s meals on Sundays and complimentary beverages for students. While Chipotle continues to win back the hearts of its once loyal customers, investors have hammered the stock. Shares are down 12% year-to-date and 45% in the past 12 months.