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Why Sleep Number, Skechers, and Atlassian Slumped Today

Steve Symington, The Motley Fool

Stocks waffled between positive and negative territory Thursday as corporate earnings season continued to gain momentum. The Dow Jones Industrial Average and the S&P 500 both posted modest gains.

But several individual stocks ended deep in the red after reporting quarterly results, including Sleep Number (NASDAQ: SNBR), Skechers (NYSE: SKX), and Atlassian (NASDAQ: TEAM).

Sleep Number's not-so-nightmarish quarter

Shares of Sleep Number plunged 18.5% after the bed manufacturer released record quarterly results that fell short of Wall Street's expectations.

On one hand, Sleep Number's net sales climbed 9.7% year over year to a record $426.4 million -- slightly below analysts' consensus estimates for $427.5 million -- comprised of roughly 5% growth from new locations and a weaker-than-expected 5% increase in comparable-store sales.

On the other hand, that translated into net income of $25.4 million, or $0.80 per share, well above estimates for $0.73 per share and up 54% from $0.52 in the year-ago period.

Falling stock charts superimposed over digital map of the world

Image source: Getty Images.

Sleep Number also reiterated its outlook for 2019 EPS of $2.25 to $2.75, assuming revenue growth of 6% to 10%. But with shares already up 50% so far in 2019 leading up to this report, its relative top-line shortfall this quarter gave traders more than enough reason to bid down the stock today.

Skechers takes a tumble

Skechers stock fell 10.5% after the casual footwear company announced record results that failed to meet analysts' expectations. First-quarter 2019 revenue climbed 2.1% year over year (or 5.2% in constant currency) to $1.28 billion, as 9.3% international growth more than offset a 6.3% domestic decline. Skechers' net earnings dropped 7.6% to $108.8 million, however, and slumped 5.3% on a per-share basis to $0.71.

Skechers' results were near the lower ends of its own guidance ranges provided in February. And analysts, on average, were looking for earnings of $0.73 per share on revenue of $1.3 billion.

Worse yet, Skechers forecast second-quarter revenue of $1.2 billion to $1.225 billion, with earnings per share of $0.30 to $0.35. Even the high ends of both ranges fell below consensus predictions for Q2 earnings of $0.39 per share on revenue of $1.23 billion.

Atlassian's soft guidance

Finally, shares of Atlassian dropped 8.3% after the Australian enterprise software giant posted strong fiscal third-quarter results, but followed them with a seemingly conservative earnings outlook.

Revenue soared 38% year over year to $309.3 million, translating into adjusted (non-IFRS) net income of $52.4 million, or $0.21 per share. Most investors were only anticipating adjusted earnings of $0.18 per share on revenue of $304.7 million.

For the fiscal fourth quarter, however, Atlassian forecast revenue of $329 million to $331 million, with adjusted net income of $0.16 per share. This guidance was technically mixed relative to consensus estimates for earnings of $0.19 per share on lower revenue of $327.6 million.

Though Atlassian tends to underpromise and overdeliver, the market wasn't in a forgiving mood with shares up nearly 80% over the past year.

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Steve Symington has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Atlassian and Skechers. The Motley Fool has a disclosure policy.