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Earnings season is only about half over – but investors have already gotten the wits scared out of them more than a few times.
There have been 11 companies, including casino operator Wynn Resorts, online portal Yahoo and automaker Ford that have terrified investors with first calendar adjusted quarterly results that have missed expectations by a hair-raising 10% more more, according to a USA TODAY analysis of data from S&P Capital IQ.
Fortunately, the companies scaring investors to death with their profits might get lots of attention – but they've been in the minority. So far, more than 211 companies in the Standard & Poor's 500 have reported their first calendar quarter results, says S&P Capital IQ. Of those 72% have beaten expectations and just 9% have missed them. Seeing so many companies beat estimates is a good thing since earnings are now on pace to be down just 0.3% for the quarter, an improvement from the 2% to 3% decline expected weeks ago.
Unfortunately, though that means 19% have missed – and some of them by a mile.
The latest scary example came Tuesday night with the report by Wynn Resorts. The company reported a roughly 70% collapse in adjusted quarterly profit to 70 cents a share. The earnings, which missed expectations by 47%, were hurt by a 38% drop in revenue from the company's operations in Macau in the quarter. Shares were already down 12% this year – and if afterhours trading is a guide – investors might get rattled some more Wednesday.
When it comes to the stocks that have been punished the hardest for a company's earnings shortfall, computer memory maker Sandisk is enough to give investors night terrors. The company's shares have lost a third of their value this year – amid what was a pretty nasty disappointment for the first quarter. Analysts feared the company's first-quarter profit would drop 51%. That's bad. What's worse is that it actually dropped by 56% – which was 11% uglier than expected.
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It's important to note sometimes positives can offset what appears to be a huge negative. Due to the way real-estate investment trusts report their earnings, there can be some distortion that makes their adjusted earnings look bad compared with expectations. Shares of REIT Equity Residential were flat Tuesday despite the company reporting first-quarter adjusted profit that missed expectations by 51%. But including all charges and credits, the company's unadjusted profit actually beat expectations by 29%.
And here's the other bright spot: all but three of the stocks are still rated "outperform" by analysts (see chart below). And given the severity of some of these misses, the stocks on average are only down 4.4% this year. Some of the stocks are actually up in 2015 so far.
But there are still plenty of companies yet to report – so there could be more screams to come.