profits rise, but stock shares drop (company, interest, analysis, job)

[Red Wolf]

As a retired person, the way to keep your job was to make a profit for your company.
A headline in yesterday's paper was troubling----------" stocks of Dillards takes a 9% drop despite 4th quarter profits up 14% "

Reading further it stated the reason----" economists had expected a higher profit"

A shame that despite profits up 14%, the employees of Dillards will be under preasure because shareholders are not satisfied.

[CouponJack]

Why is it troubling? You or anyone else who work for any public company know its all about the shareholders first....no surprise there.

[andywire]

Expected earnings are priced into the value of shares. If a company fails to achieve those expected earnings, the price of shares take a hit. It's always been this way. Nothing unusual or new.

[bmw335xi]

Originally Posted by Red Wolf

As a retired person, the way to keep your job was to make a profit for your company.
A headline in yesterday's paper was troubling----------" stocks of Dillards takes a 9% drop despite 4th quarter profits up 14% "

Reading further it stated the reason----" economists had expected a higher profit"

A shame that despite profits up 14%, the employees of Dillards will be under preasure because shareholders are not satisfied.

This is very common in stocks, its called meeting the "whisper number" which is higher than expected earnings. Stocks that consistantly beat expectations or show huge growth year over year will eventually miss the whisper number because expectations become so inflated. Apple is a prime example.

[mysticaltyger]

Originally Posted by Red Wolf

As a retired person, the way to keep your job was to make a profit for your company.
A headline in yesterday's paper was troubling----------" stocks of Dillards takes a 9% drop despite 4th quarter profits up 14% "

Reading further it stated the reason----" economists had expected a higher profit"

A shame that despite profits up 14%, the employees of Dillards will be under preasure because shareholders are not satisfied.

Nothing new here. Stocks are usually bid up in advance of expected profits...so stock prices drop if profits don't meet expectations.

[mathjak107]

there is not alot of correlation between stocks and profits.

if you read a random walk down wall street the times when corporate profits are highest is when market gains are smallest.

that work was later confirmed by ned davis research. very interesting results.

profits up 20% the s&p returned a mere 1.3% in gains

10 to 20% saw 5.8% in gains

(-10% to + 10% in profits saw a 9.3% jump in gains

(-10%) to (-25%) drop in profits saw 28.6% gains

(-25%) and lower saw a -28% drop in share price.

[shaker281]

The Motley Fool says,

"The stock has rallied over the past year on strong sales growth, but a small fourth-quarter miss -- adjusted EPS of $2.87 versus the consensus of $2.89 -- is forcing Mr. Market to sober up a bit.While Dillard's managed to increase same-store sales for the 10th consecutive quarter, analysts are concerned that the rate of growth isn't keeping up with the valuation."

Dillards is still up more than 30% in the last 52 weeks.

[80skeys]

Originally Posted by Red Wolf

A headline in yesterday's paper was troubling----------" stocks of Dillards takes a 9% drop despite 4th quarter profits up 14% "

Reading further it stated the reason----" economists had expected a higher profit"

News and economic analysis is always out of sync with what's actually going on at the moment. Stock prices are always about two quarters ahead of what the current conditions are being described as.

[cdelena]

Stock prices are determined by 'valuation' and 'expectations' so they often will not correlate to current business performance. Traders are trying to make a profit and will do so on the ups and downs of an issue where investors often are looking for a longer term gain. Stock prices over a long term may actually reflect the firms performance but prices in the short term can move for any number of reasons.

[Ted Bear]

AAPL has yet to report sequentially lower earnings...yet the stock is down nearly $300 from its peak. How do you think those employees feel?

Not to mention that bagholders.