Festivus: The Airing of Grievances!
AnnaLisa is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Festivus, the holiday for the rest of us popularized by the TV show "Seinfeld," is just two weeks away so you still have time to pull out the Festivus aluminum pole from the crawlspace, Google some recipes for the traditional meatloaf, and send out invites to upper management in the following companies.
Shareholders of these companies will have plenty to shout about for the customary airing of grievances usually synchronized with the digestion of meatloaf. The Festivus tradition calls for it to be introduced by the hallowed shouting a la Mr. Costanza of "I got a problem with you people!!!"
The Worst of the Worst
The shareholders in Envivio (NASDAQ: ENVI), a provider of multi-screen video processing solutions, have plenty to complain about. The worst performing IPO of 2012 amid a field of real stinkers dropped from a high of $9.88 to $1.42 in only seven months. It just reported miserable 2013 Q3 earnings on December 4 as revenues dropped by half from Q3 2012 and the GAAP net loss was $0.21 per share compared to the year ago of $0.00 per share. The company has a profit margin of -24.14%.
CEO Kevin O'Keefe is leaving as of December 31, not a good sign either, and the company is restructuring its sales division. In its favor, it has bounced some 10% from the November 15 low and it has no debt, but it only has $60 million in cash. While it has some big clients like LG and Hewlett Packard, the stock only trades a few hundred thousand shares a day. Analysts see growth down 42% next quarter but up 20% over the next five years.
Another name which was also on my list of Festivus in July of companies whose shareholders are steaming like the Festivus meatloaf is Zynga (NASDAQ: ZNGA). Yes, Zynga is finally applying for real-money gaming licenses (a 20 month process) but the recent dustup with former Facebook friend as the two decouple has hit the stock. It currently has an EPS of -$0.89 and other unpleasant numbers like a profit margin of -46.51% and a return on equity of -46.72%.
From its high in March of $15.91 to a low of $2.09, a fall of over 80%, shareholders have good reason to browbeat Motley Fool's Worst CEO of the Year Marc Pincus over why the company overpaid for OMGPOP, why they can't monetize mobile better, why customers and Zynga talent are leaving in droves, and finally, why he sold so many of his shares earlier this year. To be fair the company has some cash to work with, but analysts expect a negative growth rate of -33.30% for the next year and costs of acquiring content to soar.
The Worst of Retail
This was a close one, between Deckers (NASDAQ: DECK) and J.C. Penney, but as shoemaker Deckers was down more over the last year, Deckers was the winner -- or shall I say loser. Last year Deckers' CEO Angel Martinez was CNBC's CEO of the Year, but this year he's not in the running for good reason since the stock has dropped 60%. That number would be even worse if it weren't for speculation over a buyout.
The short interest is an UGGly 44.48%. Although some fundamentals aren't as bad the aforementioned tech names -- it has a profit margin of 11% and an actual earnings per share of $4.06-- the costs of sheepskin have affected the stock as has strong competition from Steve Madden and a flood of UGG imitations (at much lower price points.) The men's shoe lines haven't really gained much traction, either. Out of 15 brokers, the analyst mean price target is $37.00 and the stock is higher than that this week. They expect only 7.60% growth over the next five years.
Another stunningly bad retailer is supermarket SUPERVALU (NYSE: SVU), down over 63% this last year and trading at $2.68, up from its low of $1.68 on news there is progress in talks with Cerberus Capital Management to unload Albertson's and Save-A-Lot. EPS is -$4.91 but the forward P/E is 5.27 for 2014. This supermarket is a tough sector and the profit margin for Supervalu is -3.14%. Book value for Supervalu now stands at -$0.13 per share.
Supervalu has been hit with union problems and an industry decline. The short interest is at 40% and analysts still see a negative growth rate of -5.67%. At the Festivus feast shareholders might ask why the multi year decline with a -22% growth rate over the last five years wasn't nipped in the bud and why losing operations weren't shuttered sooner.
Hard Earned Lessons
Again, it was a tossup between ITT Educational Services (NYSE: ESI) and Apollo Group down 59.44% in the for-profit education industry. ITT lost more at 66.67% over the last year to have the honor of sitting at the head of the Festivus table. Currently it has a 2.08 P/E but the entire industry has been whipsawed by allegations of misleading marketing, competition from the nation's community colleges, and the other for-profits, as well as government crackdowns on enrollment practices at for-profit institutions.
While ITT has 73,255 students, its two-year loan default rate above 15% is just slightly lower than competitor Apollo Group, which is trying to spend its way out of trouble on massive marketing campaigns. Sentiment against these names is overwhelmingly negative with the short interest in ITT at 7.87 million shares on 23.2 million shares outstanding. Analysts expect a negative 9.77% growth rate over the next five years.
Feasting On The Carcasses
These names should be widely dissected this holiday season and management in the companies have a lot of 'splainin to do at the Festivus feast. By the New Year one or more may be bought out but each of these has had a terrible year with little indication of good news in the New Year. If you want a happy and bright Festivus this year and next, take any good news from these companies with a grain of salt and see it as a selling opportunity. In conclusion, Happy Festivus to you and yours!
leglamp has no positions in the stocks mentioned above. The Motley Fool owns shares of Supervalu. Motley Fool newsletter services recommend Supervalu. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!