Earnings season is always a time of judgement. It's when investors' expectations get their chance to meet up with reality, and the two don't always see eye to eye.
Here are five companies that have been pummeled by disappointing expectations in the past month, significantly under-performing the S&P/ASX200 (INDEXASX: ^AXJO) (ASX: XJO) in the process:
Sky Network Television Ltd (ASX: SKT) – down 17%
Sky shares plunged again following a decision from the NZ Commerce Commission blocking Sky's proposed merger with Vodafone NZ. With increasing competition from streaming services and a decline in both user numbers and average revenue per user, Sky appears at first glance to be in structural decline. The retention of its premium sports offering provides an important point of differentiation between content streaming services like Netflix, but surely it is only a matter of time before this business faces more disruption?
Worleyparsons Limited (ASX: WOR) – down 19%
After a strong share price recovery following higher resource prices in recent months, Worleyparsons shares were walloped after their latest results showed further write-downs and a loss of $2.4 million. However, with the resources environment stable for the moment, gross margins improving, and the company targeting $450 million in annualised cost savings in 2017, Worleyparsons shares could still be worth a closer look.
Freelancer Ltd (ASX: FLN) – down 27%
Despite posting a strong result with sharply higher revenues, gross profits, user numbers, and respectable cash flows, Freelancer shares have been sold off heavily over the past month. At a guess I'd say that the market thought operating profit of $0.1 million was quite low for a $400 million company. I agree, but Freelancer's business metrics are all moving in the right direction and its Latin American acquisitions show some long-term promise.
Aconex Ltd (ASX: ACX) – down 41%
Aconex's weak result was well flagged, with the earlier downgrade in January showing that the company would only deliver approximately one third of its previously announced growth. The result itself was no more attractive, and shares fell even further on the day. Despite the sharp falls, Aconex still looks pricey at some 40x full-year EBITDA forecasts.
iSentia Group Ltd (ASX: ISD) – down 35%
A weak result from iSentia Group caused the company's share price to plunge further, with the damage exaggerated by the King Content acquisition. The King Content performance was substantially worse than forecast in the recent downgrade. Although iSentia shares have had a rough few years and are a long way from their all-time high of $4.93, today's prices suggest the company will remain perpetually mediocre.
