Earnings season continues to be hit and miss.
Some companies’ Q4 results exceed Wall Street expectations, sending their stock soaring. Yet other stocks plunge on big misses and disappointing guidance. However, the companies that are failing to hit their targets and issuing weak outlooks for the year ahead seem to be missing by big amounts.
Analysts and investors don’t seem to be in a forgiving mood, sending the share prices of many companies down more than 10% immediately after their Q4 numbers and guidance goes public. While some of the selloffs can be viewed as overreactions, others appear justified. Worse, many of the companies issuing poor financials and dark outlooks seem to have major problems. And, those are likely to weigh on their earnings for many quarters ahead, making them stocks to avoid or discard.
Let’s explore three technology stocks to offload immediately after the Q4 earnings fallout.
Intel (INTC)
Intel (NASDAQ:INTC) fell 12% and dragged the entire microchip and semiconductor sector down after its recent Q4 2023 print.
Yet, the financial results themselves were decent, managing to beat Wall Street estimates. INTC plunged after management issued a grim outlook for the current quarter. For Q4 2023, Intel announced earnings per share (EPS) of 54 cents versus the forecast 45 cents. Revenue came in at $15.40 billion compared to the expected $15.15 billion.
Intel’s sales grew 10% year over year (YOY), breaking a streak of seven quarters of declining revenue. All looked rosy until the company outlined its forward guidance. Intel forecast EPS for the current first quarter of 13 cents on $12.20 billion to $13.20 billion in revenue. Analysts had been looking for earnings of 33 cents a share on $14.15 billion of revenue. Management said they expect the core businesses of personal computer and server chips to be at the low end of forecasts.
The guidance miss led to INTC stock’s worst one-day performance since the pandemic struck in 2020. The company’s share price is down nearly 10% on the year. Further, the selloff could continue in the near-term.
Tesla (TSLA)
Technically Tesla (NASDAQ:TSLA) is an automaker, but the company is also heavily involved in tech. It’s building both a humanoid robot called “Optimus” and a super computer for training artificial intelligence (AI) called “Dojo.”
Plus, investors treat Tesla like a tech stock. However, investors might now be second guessing Tesla after its Q4 2023 earnings. They’ve been described by the financial press as a “train wreck” to use only one of the negative descriptions that are being thrown around.
Tesla’s Q4 results missed Wall Street estimates across the board and management warned of a pronounced slowdown this year. The company reported EPS of 71 cents compared to 74 cents that was the consensus expectation of analysts. Revenue totaled $25.17 billion versus $25.60 billion that was forecast. The company’s operating margin of 8.2% was about half the year-earlier figure of 16%. Tesla has consistently lowered prices over the last year to boost slumping sales.
Looking ahead, TSLA executives sounded downbeat about 2024, saying that they expect EV volume growth for the year to be “notably lower.” TSLA stock is down 26% on the year, and it’s still only January.
AT&T (T)
AT&T‘s (NYSE:T) certainly looks cheap at current valuations. With a dividend yield of OVER 6%, many like the telecommunication company’s stock.
But if we go strictly by its earnings performance, than investors would be best advised to offload T stock. The telecommunications company announced weaker-than-expected Q4 earnings and issued soft forward guidance, causing its stock to decline 4% immediately after the print. AT&T’s share price is down 13% over the last 12 months.
For Q4 2023, AT&T reported EPS of 54 cents, which missed forecasts of 56 cents. Revenue came in at $32 billion, which was slightly above Wall Street expectations of $31.46 billion. Sales in the company’s wireless phone unit rose 3.9% YOY. However, sales in its wireline (landline phone) segment fell 10.3% from a year ago. Also, AT&T forecast EPS of $2.15 to $2.25 for the current first quarter of 2024, which was below Wall Street estimates of $2.46. Over the last five years, T stock has decreased 24%.
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.