A Look at 5 Tanking Stocks and Developments Behind Their Decline

The stock market continued its decline into the first hours of trading on Friday and with the earnings season still in progress, several companies have reported their latest financial results, including Cisco Systems, Inc. (NASDAQ:CSCO), J C Penney Company Inc (NYSE:JCP), Tyco International PLC (NYSE:TYC), Nordstrom, Inc. (NYSE:JWN), and El Pollo LoCo Holdings Inc (NASDAQ:LOCO). The results disappointed investors, with all stocks tanking in extended trading and opening in the red. Let’s take a closer look at their progress and see if the smart money sentiment toward these stocks suggests that the market might have overreacted to the news.

The smart money sentiment is a useful metric that can help retail investors see the big picture, rather than focus on the short-term performance of a company. Hedge funds and other large money managers often invest for the long-term horizon and conduct a detailed analysis of a stock, therefore we can imitate their activity and obtain returns above the broader market. At Insider Monkey we focus on the 15 most popular small-cap picks among some of the best-performing investors and this approach has helped us obtain returns of around 102%, beating the S&P 500 ETF (SPY) by around 53 percentage points (see more details here).

Let’s start with Cisco Systems, Inc. (NASDAQ:CSCO), which has posted its financial results for the first quarter of fiscal 2016, including revenue of $12.7 billion, up by 3.6% on the year and GAAP EPS of $0.48, versus $0.37 reported a year earlier. In addition, the company’s non-GAAP EPS of $0.59, went up by an annual 9.3%, and managed to beat the Street’s estimates of $0.56. Additionally, the revenue came in marginally higher the $12.65 billion projected by analysts. However, for the current quarter, Cisco Systems, Inc. (NASDAQ:CSCO) anticipates a revenue growth between flat and 2% on the year and non-GAAP EPS in the range of $0.53 to $0.55, which falls below the current analyst estimates. On the back of the guidance, Cisco’s stock  At the end of June, 72 funds from our database held around 3% of Cisco Systems, Inc. (NASDAQ:CSCO)’s outstanding stock. In the current round of 13F filings, Donald Yacktman’s Yacktman Asset Management reported holding 36.11 million shares of Cisco, down by 14% over the quarter.

J C Penney Company Inc (NYSE:JCP) delivered an almost 5% annual growth in net sales during the third quarter of fiscal 2015, reporting sales worth almost $2.90 billion, slightly above the estimates of $2.88 billion. The company also managed to post better-than-expected adjusted net loss of $0.47 per share, compared to a loss of $0.77 per share reported a year earlier and above the consensus estimate of a loss of $0.55. J C Penney Company Inc (NYSE:JCP) also reported a 6.4% same store sales growth during the quarter, while for the full fiscal 2015, it projects same store sales growth between 4% and 5%. The stock closed slightly higher yesterday as the company made some positive comments about its financial results, but opened over 8% in the red on Friday. In its latest 13F filing, billionaire quant Jim Simons’ reported ownership of 14.67 million shares of J C Penney Company Inc (NYSE:JCP) as of the end of September, up by 3.63 million shares over the quarter.

Read on to see more details about the earnings of the other three companies.

Tyco International PLC (NYSE:TYC)‘s stock is down by around 4% after the company posted revenue of $2.51 billion and a net income attributable to common stockholders of $0.15 per share for the fourth quarter of fiscal 2015. This compares to a revenue of $2.70 billion and a net loss of $0.20 per share reported a year earlier. The revenue also came short of estimates of $2.55 billion, while the $0.61 in EPS excluding special items was in line with the expectations. At the end of June, 39 funds among those we track held shares of Tyco International PLC (NYSE:TYC), amassing 5% of the company’s outstanding stock.

The shares of Nordstrom, Inc. (NYSE:JWN) have tanked by more than 17% on the back of the company’s financial results for the fiscal third quarter. During the quarter, Nordstrom managed to increase its sales to $3.24 billion, from $3.04 billion reported a year earlier, but its EPS slid to $0.42 from $0.73, including a reduction of $0.15 per share from the transaction costs related to the closing of Nordstrom’s credit card portfolio sale. Still, the adjusted EPS of $0.57, came short of the consensus estimate of $0.72, while revenue was also below the Street’s projection of $3.37 billion. Nordstrom, Inc. (NYSE:JWN)  posted a comparable sales growth of 3.5% for the quarter, but lowered its guidance for the full year, expecting comparable sales growth between 2.5% and 3.0%, versus 3.5% – 4.5% range projected earlier. The sales increase outlook was also reduced to the range of 7.5% to 8.0% from 8.5% to 9.5%. A total of 27 funds from our database amassed nearly 7% of Nordstrom, Inc. (NYSE:JWN)’s outstanding stock at the end of June, down from 34 funds a quarter earlier.

Finally, El Pollo LoCo Holdings Inc (NASDAQ:LOCO)‘s shares have declined by some 13% so far on Friday as the company missed the top line estimates for the third quarter and provided a weaker-than-expected outlook. El Pollo Loco reported revenue of $88.9 million and adjusted EPS of $0.18, above $86.6 million and $0.13 reported a year earlier, while the Street projected EPS of $0.15 on revenue of $90.40 million. For the full year, El Pollo LoCo Holdings Inc (NASDAQ:LOCO) expects EPS in the range of $0.67 to $0.69, slightly below the previous range of $0.67 to $0.69.

Disclosure: none