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Why Brocade Communications Systems, Inc. (BRCD), GameStop Corp. (GME) and Ulta Salon, Cosmetics & Fragrance, Inc. (ULTA) Are 3 of Today’s Worst Stocks

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Stocks may have started Friday's trading out on a bullish foot, anticipating Janet Yellen would be dovish in her speech regarding the state of the economy and any subsequent rate hike. She was more of a hawk than expected though , sending the S&P 500 down 0.16% to a close of 2169.04.

Leading the way were Brocade Communications Systems, Inc. (NASDAQ: BRCD ), GameStop Corp. (NYSE: GME ) and Ulta Salon, Cosmetics & Fragrance, Inc. (NASDAQ: ULTA ), with each waving earnings-growth red flags of some sort.

Brocade Communications Systems, Inc. (BRCD)

Networking equipment maker Brocade Communications Systems was up-ended by a disappointing outlook despite an earnings beat on Friday.

In its recently completed third quarter, Brocade Communications Systems earned 21 cents per share on sales of $590.7 million. Both topped estimates for a profit of 17 cents per share of BRCD and revenue of $576.3 million. Both were down from year-ago levels though … an especially big disappointment considering Brocade completed the acquisition of Ruckus Wireless during the quarter.

Fanning the bearish flames that took BRCD near-12% lower today was a lackluster fourth-quarter outlook. Brocade is now expecting earnings of between 21 cents and 23 cents per share, versus analyst estimates of 23 cents, and a year-ago profit of 26 cents per share of BRCD.

GameStop Corp. (GME)

On the otherhand, video game retailer GameStop lost ground today on an earnings miss, despite an upbeat outlook.

In its second quarter of the year, GameStop earned the expected 27 cents per share, but revenue of $1.63 billion fell short of the $1.72 billion analysts were anticipating. The killer? Same-store sales were down 10.6%.

Nevertheless, GameStop remains optimistic about the foreseeable future. That is, it still believes it will earn somewhere between 53 and 58 cents per share of GME in the third quarter, and book a profit of between $3.90 and $4.05 for all of 2016. Analysts were only looking for income of 53 cents for the quarter currently underway, and looking for a bottom line of $3.99 per share for the full year.

GME ended the day down 10.6%.

Ulta Salon, Cosmetics & Fragrance, Inc. (ULTA)

Finally, beauty industry player Ulta Salon, Cosmetics & Fragrance did better than expected last quarter, but its outlook for the quarter currently underway was less than thrilling, sending ULTA shares down 6% for the day.

Last quarter - the company's second fiscal quarter of the year - Ulta Salon earned $1.43 per share on $1.07 billion in revenue. Analysts were only expecting a profit of $1.39 per share, and sales were up 22% on a year-over-year basis. Same-store sales grew 14.4%, versus an expected increase of 12.7%.

Looking ahead, Ulta said it expects to post a profit of between $1.25 and $1.30 per share for the third quarter of the year. That range was slightly higher than its previous Q3 guidance, but didn't compare favorably to the average analyst expectation for a profit of $1.30 for the third quarter.

As of this writing, James Brumley did not hold a position in any of the aforementioned securities.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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