Some of the top companies on the market just posted poor second-quarter financial results. While company executives always do their best to put a positive spin on their quarterly numbers. there’s no covering up a truly awful print. That includes these seven stocks to avoid after Q2 earnings.
Stocks to Avoid After Q2 Earnings: Roblox (RBLX)
Talk about an ugly print. Shares of Roblox (NYSE:RBLX) fell 22% after the video game developer reported a wider net loss. In fact, the company lost $282.8 million for the quarter ended June 30, compared to a net loss of $176.4 million for the same period of 2022. Revenue for Q2 totaled $781 million, as compared to expectations for $785 million. The company blamed the poor showing on higher expenses for corporate overhead and infrastructure.
In addition, the company said that the average booking per daily active user was $11.92 in Q2, down 3% from a year earlier. Roblox didn’t provide any forward guidance but said that it does. expect to continue reporting financial losses for the “foreseeable future.” Needless to say, shareholders aren’t too pleased with the comment, making RBLX one of the top stocks to avoid after Q2 earnings.
Barrick Gold (GOLD)
With gold trading higher, you’d think Barrick Gold (NYSE:GOLD) would be capitalizing on the opportunity and doing well. Unfortunately, that’s not the case. The gold miner just reported dismal Q2 financial results that showed its net income, or profit, declined 38% year-over-year to $305 million. Gold production in Q2 fell 3% to a million ounces from a year earlier. Analysts, on average, were expecting gold production of 1.09 million ounces in the quarter ended June 30.
Barrick Gold did manage to eke out an earnings per share beat of 19 cents, though, which was better than forecasts for 17 cents a share. The company attributed the slight earnings beat to higher gold prices, which rose 4.3% in Q2, year over year. However, the overall Q2 print was lackluster at best. The company maintained its full-year production outlook for gold saying output in the second half of the year should improve at several of its mines. But don’t hold your breath.
Stocks to Avoid After Q2 Earnings: WeWork (WE)
As a general rule, a company shouldn’t mention a potential bankruptcy filing when announcing quarterly results. But that’s exactly what WeWork (NYSE:WE) did. After reporting a $700 million net loss in the first half of the year, the company warned it may be forced to file for bankruptcy. All after the company lost $2.3 billion for all of 2022.
The company, which thrived during the Covid-19 pandemic, now says that mounting financial losses and negative cash flows are raising doubts about its ability to “continue as a going concern.” Worse, it’s laboring under $3 billion of debt and struggling to generate cash to continue operations. WeWork’s CEO Sandeep Mathrani left the company in May and his successor has not yet been named. WE stock has declined 99% since the company went public in 2021 through a merger with a SPAC, making it one of the top stocks to avoid after Q2 earnings.
Telus Corp. (TU)
Another top stocks to avoid after earnings is Telus Corp. (NYSE:TU). The Canadian firm not only reported a 60% plunge in its profit, but it also announced that it’s immediately cutting 6,000 jobs. Telus said the job cuts include 4,000 workers at its headquarters in Vancouver, along with 2,000 cuts at its international operations, including the U.S. This after the company announced that its Q2 net income fell 60% year-over-year to $196 million.
Worse, net income of 14 cents per share missed analysts’ expectations for a profit of 22 cents a share. Revenue itotaled $4.95 billion, up 13% from $4.40 billion a year earlier. Unfortunately, that didn’t help the company’s bottom line. In July, before the Q2 release, Telus revised down its annual guidance for 2023, citing demand pressures and a need to cut costs. The company is now forecasting revenue growth of 9.5% to 11.5% this year, down from a previous growth estimate of 11% to 14%. TU stock has declined 23% over the last 12 months and is down 3% over five years. This is definitely a stock to avoid after Q2 earnings.
Icahn Enterprises (IEP)
Next up is Icahn Enterprises (NASDAQ:IEP), which just cut its once mighty dividend payment in half to $1 a share, drawing the ire of investors. The previous dividend payment of $2 a share each quarter gave Icahn Enterprises a dividend yield of more than 25%, the highest among stocks listed on the benchmark S&P 500 index.
The cut to the dividend payment comes after a critical report on Icahn Enterprises released in May by short seller Hindenburg Research. The report accused Carl Icahn of operating a de facto Ponzi Scheme, using new investor money to pay a dividend set at what Hindenburg called unsustainable levels. Until the Q2 print, Carl Icahn had steadfastly refused to lower the dividend payment and accused Hindenburg Research of conducting a hatchet job on his company. The dividend cut also arrived as Icahn Enterprises reported Q2 earnings that were worse than expected. The company announced a loss of 72 cents a share, which was much worse than forecasts for a 25-cent profit.
Nutrien (NTR)
Nutrien (NYSE:NTR), the largest fertilizer and potash company in the world, reported that its Q2 profit plunged 88% from a year earlier to $448 million. In Q2 2022, the company delivered net income of $3.6 billion as demand for its fertilizer products spiked following Russia’s invasion of Ukraine. The company said its revenue in the April through June quarter totaled $11.7 billion, down 19% from $14.5 billion during the same period of 2022.
Earnings per share came in at 89 cents, down from $6.51 a year earlier. Nutrien blamed the poor performance on lower prices for fertilizer and weak foreign sales of its potash products. Worse, the company said it expects its earnings and sales to continue to be negatively impacted by lower prices and weak demand for the remainder of this year. A possible global economic recession could hurt demand through mid-2024, said the company. NTR stock has dropped 23% in the last 12 months. This is one of the worst Q2 earnings stocks.
Domino’s Pizza (DPZ)
Domino’s Pizza (NYSE:DPZ) did not deliver with its Q2 financial results. Rather, it announced that higher prices and delivery fees hurt demand for its pizza and chicken wings. The world’s largest pizza chain said it saw lower order volumes during Q2 as it raised menu prices and delivery fees. All in an effort to counter the impact of inflation. Unfortunately, the higher prices drove away budget-conscious consumers who are also struggling with elevated prices.
Domino’s said that its same-store sales rose a tepid 0.1% in Q2, which was below Wall Street’s forecast for growth of 0.2%. Revenue during Q2 declined 3.8% to $1.02 billion compared with consensus analyst estimates of $1.07 billion. EPS came in at $3.08, which was above estimates of $3.05. To boost its deliveries, Domino’s just partnered with Uber (NYSE:UBER) to allow consumers to place pizza orders on the ride-sharing company’s food delivery apps. The jury’s out on whether that will help or not.
On the date of publication, Joel Baglole 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.
