In this article, we discuss 10 companies that just cut their guidance. If you want to see more stocks that recently slashed guidance, check out These 5 Companies Just Cut Their Guidance.
According to data from Factset dated July 5, 103 S&P 500 companies have posted second quarter EPS guidance, of which 71 firms issued negative EPS guidance and 32 laid out optimistic guidance. Q2 2022 has the largest number of S&P 500 companies announcing negative quarterly EPS guidance since Q4 2019. The negative guidance was largely concentrated in the information technology, industrials, and consumer discretionary sectors.
In addition to the rampant inflation, recession fears, rising commodity and fuel prices, and global supply chain constraints, the strengthening US dollar has also hit many companies in the second quarter of 2022, consequently pushing them to slash guidance for the rest of the year. The dollar has surged to its highest level in 20 years, and the currency shock is expected to hit industry titans such as Microsoft Corporation (NASDAQ:MSFT) and Apple Inc. (NASDAQ:AAPL) as well, since they generate a significant portion of their revenue from outside the US.
Max Kettner, a strategist with HSBC, told Financial Times on July 25 that even if the dollar were to stop surging, the strength of the currency in the last year will trigger more earnings downgrades and estimate cuts as companies grapple to deal with forex headwinds. Companies dependent on international sales suffer tremendously as it renders them less competitive versus the local alternatives. Some of the notable companies that recently cut guidance include Lockheed Martin Corporation (NYSE:LMT), D.R. Horton, Inc. (NYSE:DHI), and Vale S.A. (NYSE:VALE).
Our Methodology
This list consists of companies that announced lowered guidance and earnings estimates in the last week. We have ranked the firms according to the hedge fund sentiment, which was gauged from Insider Monkey’s Q1 2022 database of 900+ elite funds.
These Companies Just Cut Their Guidance
10. Forestar Group Inc. (NYSE:FOR)
Number of Hedge Fund Holders: 10
Forestar Group Inc. (NYSE:FOR) is a residential real estate development company based in Arlington, Texas. On July 19, Forestar Group Inc. (NYSE:FOR) posted earnings for the June quarter. The earnings per share came in at $0.80, missing consensus estimates by $0.01. The revenue of $308.50 million dropped 1.41% compared to the prior year quarter and missed analysts’ estimates by $97.77 million.
On July 19, Forestar Group Inc. (NYSE:FOR) stock dropped 17% after the company cut its Q3 guidance for full-year lot deliveries and revenue due to delays in development and contracted housing demand. The company now expects to deliver approximately 17,000 lots which will generate a revenue of $1.425 billion in 2022, down from its earlier guidance of 19,500 to 20,000 lots driving $1.7 billion in revenue. The company also slashed FY2022 pretax profit margin to about 14.25% versus its last guidance of 14.0% to 14.5%.
Among the hedge funds tracked by Insider Monkey, Forestar Group Inc. (NYSE:FOR) was part of 10 hedge fund portfolios at the end of March 2022, compared to 13 funds in the preceding quarter. John Khoury’s Long Pond Capital is the biggest shareholder of the company, with 4.6 million shares worth $83.15 million.
In addition to Lockheed Martin Corporation (NYSE:LMT), D.R. Horton, Inc. (NYSE:DHI), and Vale S.A. (NYSE:VALE), Forestar Group Inc. (NYSE:FOR) recently announced lowered guidance.
9. Aveanna Healthcare Holdings Inc. (NASDAQ:AVAH)
Number of Hedge Fund Holders: 10
Aveanna Healthcare Holdings Inc. (NASDAQ:AVAH) is a Georgia-based home care platform company offering private duty nursing, adult home health and hospice, and home-based pediatric therapy in the United States. Aveanna Healthcare Holdings Inc. (NASDAQ:AVAH) on July 19 slashed its 2022 guidance and expects to post weak Q2 results because of labor headwinds.
The company forecasts revenue of at least $1.79 billion compared to Street consensus of $1.91 billion, versus its earlier guidance of $1.89 billion to $1.92 billion. Aveanna Healthcare Holdings Inc. (NASDAQ:AVAH) expects 2022 adjusted EBITDA to come in at least $150 million versus the past outlook of $190 million to $205 million.
According to Insider Monkey’s data, 10 hedge funds were bullish on Aveanna Healthcare Holdings Inc. (NASDAQ:AVAH) at the end of the first quarter of 2022, with collective stakes worth about $25 million, compared to the same number of funds in the prior quarter, holding stakes in the company valued at $53.7 million. Jared Nussbaum’s Nut Tree Capital is the leading position holder in Aveanna Healthcare Holdings Inc. (NASDAQ:AVAH), with 6.20 million shares worth $21.15 million.
8. Corsair Gaming, Inc. (NASDAQ:CRSR)
Number of Hedge Fund Holders: 12
Corsair Gaming, Inc. (NASDAQ:CRSR) markets and distributes gaming and streaming peripherals, components, and accessories in the Americas, Europe, the Middle East, and the Asia Pacific. On July 21, Corsair Gaming, Inc. (NASDAQ:CRSR) stock plummeted over 14% after the company posted preliminary Q2 revenue of about $284 million, which was significantly below the Street consensus of $350.16 million. The firm expects adjusted EBITDA loss to fall between $10 million to $11 million. The company CEO reiterated that slashed consumer spending, especially in Europe, has resulted in unsold inventory buildup.
According to Insider Monkey’s data, Corsair Gaming, Inc. (NASDAQ:CRSR) was part of 12 public hedge fund portfolios in Q1 2022, down from 18 funds in the prior quarter. The collective stakes in Q1 2022 decreased to $21.20 million from $39.30 million in Q4 2021. Ken Griffin’s Citadel Investment Group is one of the prominent stakeholders of the company, with 358,347 shares worth $7.5 million.
Here is what Sterling Partners Equity Advisors has to say about Corsair Gaming, Inc. (NASDAQ:CRSR) in its Q4 2021 investor letter:
“Corsair Gaming is a global developer and manufacturer of high-performance gear and technology for gamers, content creators, and PC enthusiasts. Corsair delivers a full ecosystem of products; PC Components, Peripherals, Premium Streaming Equipment, and Smart Ambient Lighting. Corsair responded to the difficult sourcing and shipping environment by building inventory closer to its customers. Management believes that once this difficult supply chain is behind them their targeted growth and profitability targets will return. We believe in the growing gaming market globally and Corsair is positioned well to support this growing customer base with a platter of products.”
7. Vale S.A. (NYSE:VALE)
Number of Hedge Fund Holders: 27
Vale S.A. (NYSE:VALE) produces and sells iron ore and iron ore pellets in Brazil and internationally. The company operates through Ferrous Minerals and Base Metals segments. Vale S.A. (NYSE:VALE) announced that although its Q2 iron ore production climbed 17.4% compared to the prior year quarter, it dropped 1.2% on a year over year basis. The copper and nickel output in Q2 also declined 24% and 16%, respectively. The company cut its FY 2022 iron ore production guidance as it sold its Center-West system assets in April. The company now expects full-year iron ore output of 310 million to 320 million metric tons, down from an earlier estimate of 320 million to 335 million tons. The full-year copper production guidance of 270,000 to 285,000 tons was also slashed from the previous estimate of 330,000 to 355,000 tons.
Among the hedge funds tracked by Insider Monkey, 27 funds reported owning stakes in Vale S.A. (NYSE:VALE) at the end of March 2022, up from 25 funds in the last quarter. Ken Fisher’s Fisher Asset Management featured as the largest shareholder of the company, with 28.6 million shares worth $573.45 million.
Here is what GMO LLC has to say about Vale S.A. (NYSE:VALE) in its Q1 2022 investor letter:
“Let’s look at Vale (NYSE:VALE), the world’s largest iron ore producer, as a case study for how shareholders can be rewarded. Vale’s stock price is about where it was at the beginning of last year. Despite the market’s lack of enthusiasm, the company generated about $20 billion of free cash flow last year. Not bad for a company with a market cap of a little over $100 billion and no substantive debt as of the end of March. 4 What did the company do with all that cash? Last year, Vale paid out about $9 billion in regularly scheduled dividends and distributed another $10 billion between extra dividends and share repurchases. Combined with dividends distributed in the first quarter of this year and a recently announced share repurchase, Vale has returned or announced the return of over $33 billion since the beginning of last year, almost a 32% yield relative to the market cap of the company. Not a bad way to win.”
6. Qualtrics International Inc. (NASDAQ:XM)
Number of Hedge Fund Holders: 30
Qualtrics International Inc. (NASDAQ:XM) is an American company that offers an experience management platform to manage customer, employee, and brand experiences. Although Q2 was a robust quarter for Qualtrics International Inc. (NASDAQ:XM), the company slashed guidance for Q3. The company sees total revenue of $358 million to $369 million for Q3, versus a consensus of $358.96 million. However, the non-GAAP net loss per share is expected to fall between $0.02 and $0.04, compared to a consensus net loss per unit of $0.01. Similarly, for the full-year guidance, Qualtrics International Inc. (NASDAQ:XM) reported a total revenue between $1.422 billion and $1.426 billion, compared to a $1.43 billion consensus. Non-GAAP net loss per share for FY 2022 is projected to come in at between $0.07 and $0.09, versus Street estimate of $0.01.
According to Insider Monkey’s Q1 database, 30 hedge funds were bullish on Qualtrics International Inc. (NASDAQ:XM), down from 38 funds in the previous quarter. Jim Davidson, Dave Roux, and Glenn Hutchins’ Silver Lake Partners is the biggest position holder in the company, with about 25 million shares worth $713.40 million.
Like Lockheed Martin Corporation (NYSE:LMT), D.R. Horton, Inc. (NYSE:DHI), and Vale S.A. (NYSE:VALE), Qualtrics International Inc. (NASDAQ:XM) made headlines for slashing guidance.
Here is what VGI Partners has to say about Qualtrics International Inc. (NASDAQ:XM) in its Q4 2021 investor letter:
“Our analysis shows Qualtrics is the world leader in experience management (EM) software. EM software is a category that has been turbocharged by the pandemic as corporations and governments are striving to better understand their customers and employees in order to improve satisfaction, retention and in turn maximize the dollar return on each customer. Customer experience was previously assessed via surveys and other forms of analog feedback. Today Qualtrics allows its clients to assess their customers’ feedback and improve the experience with more sophisticated tools (e.g. Net Promoter Scores) and in real time via multiple data feeds which include call centre conversations, emails, online chatbots, social media feeds and so on.
A good example of a Qualtrics customer is JetBlue Airlines, a major American low-cost airline. JetBlue use the platform to analyse customer feedback and in turn better tailor pricing for flights and also improve the in-flight experience, in order to expand Net Promoter Scores (NPS) and increase customer retention through this real-time feedback. For example, by combining flight frequency and pricing studies, JetBlue found that 82% of their passengers didn’t care about free bags and instead preferred cheaper ticket prices. JetBlue responded by rolling out different rate structures and pricing options for passengers, which were well received. By taking a deep dive into passengers’ feedback in Philadelphia, JetBlue was able to trace dissatisfaction to the lack of airport shops and amenities open early in the morning, where JetBlue responded quickly by simply passing out water, juice, and coffee at the gate to boost customer satisfaction.
Large corporations are accelerating their usage of Qualtrics software with 85% of the Fortune 100 using the platform. The incremental spend with Qualtrics by existing customers is impressive and continues to grow in excess of 20%. This is underpinned by expanding usage along with the adoption of additional modules which allow clients to gain greater depth and breadth of data from the Qualtrics platform. In addition, new customers add to the growth of existing customers resulting in what we believe will be revenue growth of over 30% p.a. over the coming years…” (Click here to see the full text)
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Disclosure: None. These 10 Companies Just Cut Their Guidance is originally published on Insider Monkey.
