While companies who rank among the earnings losers category don’t obviously generate confidence, it’s also important to keep in mind the big picture. Technology juggernaut Nvidia (NASDAQ:NVDA) provides an extreme example of this.
In the third quarter of 2023, Nvidia posted earnings per share of 58 cents. This tally represented a stinker against the estimated EPS target of 70 cents. The company took it personally. Since then, the company has been beating its targets, continuing to impress onlookers up until the most recent Q4 print.
As it turns out, people were wrong to question Nvidia. I was flat-out wrong for even being pensive about the continued hype over artificial intelligence and related innovations. And while I’m not saying that all earnings losers have NVDA potential in them, you don’t want to dismiss the red-stained enterprises until you’ve had a closer look.
With that, below are the earnings losers that could turn things around.
Celanese (CE)
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A technology and specialty materials company, Celanese (NYSE:CE) hasn’t had the greatest start to the new year. Heading into its fourth-quarter earnings report, analysts anticipated that Celanese would post EPS of $2.29. However, the actual result landed at $2.24. Other sources provide slightly different analyst consensus stats but the point remains: Celanese fell short.
Also, the company generated revenue of $2.57 billion. This too missed the consensus view of $2.59 billion. Overall, it wasn’t a good look for the company. However, I believe CE is one of the earnings losers that can make good for shareholders soon enough.
Primarily, the catalyst surrounding the business is its relevance. One of the company’s specialty materials is vinyl acetate monomer, an intermediate material used in the production of various resins and polymers. End products include paints, coatings, adhesives, sealants and other industrial and consumer applications.
Secondly, analysts still rate shares a consensus moderate buy. The high-side target lands at $176, implying 17% upside potential.
Casella Waste Systems (CWST)
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A waste management company, Casella Waste Systems (NASDAQ:CWST) does a dirty job, so to speak. Of course, it’s one of the most important ones for the proper functioning of society. However, this core relevance wasn’t enough to save the business from being one of the recent earnings losers.
Heading into the Q4 earnings report, analysts anticipated Casella’s EPS to land at 16 cents. Unfortunately, the company missed the market by 3 pennies. In Q4 of last year, Casella also missed its consensus analyst target. However, it did manage to post EPS of 18 cents. Also, the revenue front didn’t provide much relief, coming in at $359.57 million against a consensus target of $360.08 million.
Despite slumping as one of the earnings losers, CWST stock should be fine in the long run. We’re talking about an underlying business that clearly benefits from a natural monopoly. With high barriers to entry, Casella should be entrenched.
Also, analysts peg shares as a moderate buy with a $99 price target, implying over 9% growth potential.
US Foods (USFD)
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A services provider for the namesake industry, US Foods (NYSE:USFD) helps distribute calories (if you will) for various industries. These sectors include healthcare, hospitality, restaurants, retail and educational establishments. By logical deduction, it’s one of the most relevant businesses. Again, though, relevance alone can’t always shore up the financials.
Heading into the company’s Q4 earnings report, analysts anticipated that US Foods would deliver EPS of 66 cents. However, the company ended up falling 2 cents shy of the target. On the sales front, management reported a tally of $8.94 billion. This figure beat the experts’ consensus view of $8.8 billion.
Despite the mixed results, USFD stock appears to be on solid footing. Therefore, it’s hard to call it one of the earnings losers. Since the start of the year, shares gained almost 9%. Over the past 52 weeks, they’re up more than 27%.
Analysts view US Foods as a strong buy with a $55.25 average price target, implying almost 11% growth.
DoorDash (DASH)
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Online food ordering and delivery platform DoorDash (NASDAQ:DASH) presents an intriguing conundrum. Looking at the print, the company technically represented one of the earnings losers. Per data from TipRanks, analysts anticipated Q4 loss per share to sit at 13 cents. Unfortunately, DoorDash posted a loss of 39 cents a share.
On the revenue side, circumstances were much different. Heading into the financial disclosure, the Street’s experts saw the delivery platform ringing up $2.25 billion in sales. Here, the company beat the estimate with a total haul of $2.3 billion. Moving forward, DASH stock presents a mixture of risk and reward.
On the risk side, DoorDash may suffer from political dynamics, particularly the raising of the minimum wage. Management claims that order volume has dropped sharply in areas that have significantly raised the aforementioned payout metric. On the flipside, rising e-commerce sales suggest that consumers still appreciate the convenience of home deliveries.
Analysts peg shares a consensus moderate buy with a $128.09 price target, implying nearly 12% upside potential. For the adventurous speculator, it might be worth picking up on a relative discount.
CF Industries (CF)
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A manufacturer and distributor of agricultural fertilizers, CF Industries (NYSE:CF) plays a vital role in the broader food supply chain. However, investors haven’t really been keen on the company. Given the unstable geopolitical environment, it’s difficult to get a read on the agricultural sector. In particular, the underlying ammonia, urea and ammonium nitrate product ecosystems present challenges.
Ahead of CF’s Q4 earnings, analysts anticipated EPS to land at $1.56. That’s a marked decline from last year’s forecasted estimate of $4.30. Even so, the company missed the target, coming in at $1.50 per share. However, the top line provided some optimism. Against a forecast of $1.51 billion, CF rang up $1.57 billion in revenue.
What’s notable here is that in Q3 2023, the agricultural giant posted sales of $1.27 billion (which missed the analyst consensus by $20 million). Therefore, CF could be on its way higher toward a recovery.
Analysts are hoping that narrative pans out. They rate shares a consensus moderate buy with an $89 price target, implying over 14% upside.
Realty Income (O)
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A real estate investment trust (REIT), Realty Income (NYSE:O) invests in free standing, single-tenant commercial properties. They’re located in the U.S., Spain and the U.K. Perhaps its most notable attribute among investors is that the company pays a monthly dividend. That can be very helpful in terms of consistently reinvesting one’s earnings more frequently.
However, this attribute didn’t exactly help on the earnings front. Ahead of the Q4 disclosure, analysts projected EPS to land at 33 cents. However, Realty only managed to come in at 30 cents. Fortunately, the revenue picture was much more encouraging. Against a forecast of $1.02 billion, the REIT rang up sales of $1.08 billion.
Yes, on the bottom line, Realty ranks among the earnings losers. Still, this is one loser that you should bet on, no question. With a forward dividend yield of 5.84%, the REIT is quite generous. Also, it features 31 years of consecutive payout increases.
Lastly, analysts peg shares a moderate buy with a $61.60 price target, implying 17% growth potential.
Caesars Entertainment (CZR)
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Since the start of the year, Caesars Entertainment (NASDAQ:CZR) has been struggling for traction. It’s not difficult to see why. With households wrestling with stubbornly elevated inflation along with high borrowing costs, they’ve had difficulty making ends meet. As a result, many budgets for discretionary expenditures – including renting rooms at Caesars – got slashed.
To be sure, the company’s recent earnings performance didn’t help matters. Against a targeted loss of 4 cents per share in Q4, management disclosed a loss of 34 cents per share. Adding to the misery, Caesars printed revenue of $2.83 billion. Unfortunately, Wall Street expected the casino and resort business to hit $2.85 billion.
One of the ugliest earnings losers, CZR stock nevertheless might appeal to extreme contrarians. According to a relatively recent study, revenge travel could remain a strong phenomenon this year. If so, that might make Caesars one of the top surprises.
Notably, analysts rate shares a consensus strong buy with a $59.18 average target, implying over 40% upside.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare. Tweet him at @EnomotoMedia.
