Earnings season is coming to an end and, by all accounts, it was a disappointing period for corporate America. According to data from Bank of America, earnings for the final quarter of 2022 came in 0.1% below analyst forecasts at the start of earnings season. That was the worst quarter since Q1 202o and a stark contrast to the average 3.7% profit beat from 2017 to 2019. According to Credit Suisse, excluding recessions, the fourth quarter of 2022 was the worst earnings season in 24 years. Following the ugliest earnings season in recent memory, investors should be on the lookout for stocks to sell.
While a few companies managed to knock it out of the park with their earnings and forward guidance, many companies came up short on their results, forecasts or both, raising questions about their financial health and strategic direction. Specifically, the three companies below deserve a place on your list of stocks to sell following their latest earnings reports.
| INTC | Intel | $25.99 |
| TGT | Target | $165.20 |
| COIN | Coinbase | $62.77 |
Intel (INTC)
Shares of Intel (NASDAQ:INTC) fell as much as 10% on Jan. 27 after the company reported fourth-quarter results that missed Wall Street’s expectations on nearly every metric. While the stock managed to regain some ground by the day’s close, INTC currently sits nearly 13% below where it was trading before the company announced.
The Santa Clara, California-based semiconductor and microchip company reported Q4 earnings per share of 10 cents. Analysts had been expecting 20 cents. Revenue also came up short, declining 32% year over year to $14.04 billion compared to an expected $14.45 billion. And Intel reported a $664 million Q4 net loss, compared with a profit of $4.62 billion a year earlier. Intel blamed the poor showing on declining sales of personal computers coming out of the pandemic.
But the bad news didn’t stop there. Management forecast an adjusted net loss of 15 cents per share on $10.5 billion to $11.5 billion in revenue for the first quarter. This was well below the 24 cents a share on $13.93 billion in revenue analysts polled by Refinitiv had been expecting. Moreover, Intel declined to provide full-year guidance due to what CEO Pat Gelsinger called “the uncertainty in the current environment.”
A few days after the earnings debacle, Intel announced it would cut its executive and manager compensation, including a 25% pay cut for Gelsinger. Unfortunately, it’s going to take much more than that to right this ship. Put INTC at the top of your list of stocks to sell.
Target (TGT)
The latest quarterly earnings from Target (NYSE:TGT) were positive. It was guidance that was problematic. Specifically, the Minneapolis-based big-box retailer warned of a continued slowdown in consumer spending, especially on discretionary items.
For its holiday quarter, Target reported sales of $31.4 billion. This was ahead of analyst expectations for $30.72 billion in sales and represented a roughly 1% increase over the year-ago quarter. Earnings per share of $1.89 blew past the $1.40 expected by analysts who cover the company.
That’s the good news. The bad news is that management warned investors to expect a same-store sale increase in the low single digits, at best, and a low single-digit decline, at worst. Target also said it expects full-year EPS of $7.75 to $8.75, well below the $9.23 Wall Street was expecting.
Over the past year, Target has struggled with excess inventory, squeezed profit margins and inflation’s impact on consumers, with shares declining 20%. This year doesn’t look much brighter for the retail giant, making it one of today’s stocks to sell.
Coinbase (COIN)
Not as bad as expected, but still pretty bad. That’s the best way to explain the most recent earnings print from Wilmington, Delaware-based cryptocurrency exchange Coinbase (NASDAQ:COIN).
The company reported a fourth-quarter loss of $2.46 per share. While that was better than the $2.55-per-share loss expected on Wall Street, it was still a hefty one. Quarterly revenue of $629 million also beat expectations, which were calling for $590 million. However, revenue was down nearly 75% on a year-over-year basis.
Perhaps most disheartening was the news that Coinbase’s user base continues to decline. The company said its user base fell to 8.3 million monthly transacting users during the quarter, down from 8.5 million in the third quarter. During the same period, trading volume on Coinbase’s exchange declined 9% to $145 billion.
The exchange has been cutting its workforce in an attempt to stop the bleeding. It laid off 20% of its employees in January after letting go of 18% of its workforce in June 2022.
Despite the overhead reduction, the company continues to report heavy losses as users leave its platform amid the ongoing crypto winter. Furthermore, management has warned that business could be negatively impacted by regulatory actions from the Securities and Exchange Commission, which has intensified its focus on cryptocurrencies recently.
The stock is down 61% over the past year, but shares could have much further to fall. There’s no question that COIN is one of the stocks to sell following its latest earnings report.
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.