The markets continued their upward march this week, adding to the already substantial gains for 2012. Greece was no help, as a debt agreement that would unlock the next round of bailout funding and let the country sidestep a messy default proved elusive. The economic news in the United States was a bit more optimistic, as multiple manufacturing surveys surprised economists on the upside, while unemployment claims continued to fall. In addition, minutes from the Federal Reserve's most recent rate-setting meeting stoked expectations of further bond buying by the central bank.
By the time the week closed, the Dow Jones Industrial Average (INDEX: ^DJI) had tacked on 1.2%, while the broader Russell 3000 managed an even more robust 1.5% gain.
The 3 Worst-Performing Sectors
Russell 3000 Sector
Weekly Price Change
Month-to-Date Price Change
Source: S&P Capital IQ. Weekly price change is Feb. 10-Feb. 17. Monthly price change is Jan. 31-Feb. 17.
It's still earnings season, and some of the biggest losers over the past week were whacked thanks to lackluster quarterly reports. The top line for DG(R) (NAS: DGIT) looked good, at least. Total revenue of $108 million grew 44% from the year before. However, earnings per share fell 69% to $0.16, which was $0.05 below what Wall Street analysts had expected the company to report. Management described 2011 as a "transitional" year for DG(R) and said that its mix of business will serve it well going forward, but investors clearly weren't convinced.
Meanwhile, property-management software maker RealPage (NAS: RP) felt the sting of a lackluster forecast. For the fourth quarter, the company's revenue grew 32% year over year, and earnings per share of $0.10 matched expectations. However, at the midpoint of management's guidance, both 2012 revenue and earnings per share were short of the average Wall Street estimate.
The 3 Worst-Performing Russell 3000 Companies
Weekly Price Change
Source: S&P Capital IQ. Weekly price change is Feb. 10-Feb. 17. Includes only companies with market caps of $250 million or more.
Also among the week's worst performers were MEMC Electronic Materials (NYS: WFR) and Vonage (NYS: VG) . Continuing the earnings theme, MEMC's report was a bit of a bloodbath. After eking out a $0.05-per-share profit in the fourth quarter of 2010, the company managed a massive $6.44-per-share loss in the most recent quarter. Backing out one-time items and tax effects, the company showed investors a more modest adjusted loss of $0.09 per share, but that was still worse than the $0.06 loss that Wall Street had expected. By the time the week closed, MEMC's shares had lost 13%.
For Vonage, the closely watched earnings-per-share number looked good on an absolute basis. After adjustments, it reported $0.10 in per-share profits, up from $0.06 in the prior year. That was good, but not quite good enough, as analysts were hoping for $0.11. Looking more broadly, though, the results paint a pretty uninspiring picture, with both revenue and EBITDA -- a cash-flow measure -- down slightly from a year ago. For the year ahead, the company expects to post EBITDA of between $120 million and $140 million. Though S&P Capital IQ only listed one analyst with an estimate on that metric, that analyst's expectation was for a considerably higher $161 million. Investors shaved 20% off of Vonage's value during the week.
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