Have you ever watched a stock you own plummet after a disappointing earnings report and wondered, “Could I have seen this coming?” It’s a gut punch, isn’t it? This earnings season, some companies didn’t just miss the mark—they crashed and burned on both revenue and earnings expectations. According to recent market analysis, these “double misses” can signal trouble ahead, making them potential candidates for selling. In this article, I’ll dive into why these stocks might be ones to avoid, share insights from industry experts, and offer practical tips to navigate the choppy waters of the stock market. Buckle up for a deep dive into what’s shaking up Wall Street and how you can protect your portfolio.
Why Double Misses Matter in Today’s Market
The stock market can feel like a rollercoaster, especially during earnings season. When a company reports earnings, Wall Street analysts set expectations for both earnings per share (EPS) and revenue. A “double miss” happens when a company falls short on both, which can be a red flag for investors. Why? It often indicates deeper operational or market challenges that could drag the stock down further. This season, with 94% of S&P 500 companies reporting, about 82% beat earnings expectations, and 79% surpassed revenue forecasts. But the outliers—the ones that missed both—are the ones to watch out for.
In my experience, a single miss might be a hiccup, but a double miss feels like a warning siren. It’s like when your car’s check engine light and oil light come on at the same time—something’s seriously off. Let’s explore some companies that stumbled this quarter and why analysts are waving red flags.
Southwest Airlines: Turbulence Ahead?
One company that’s been in the spotlight for all the wrong reasons is a major airline. Its stock has slid 8% this year, and for good reason. The company reported adjusted earnings of 43 cents per share on $7.24 billion in revenue, missing analyst expectations of 51 cents and $7.30 billion. Ouch. Analysts have since cooled on the stock, with one firm downgrading it to a neutral rating, suggesting the stock is closer to its fair value now.
At 36 times next year’s estimated earnings, the stock’s aggressive buyback program might not be enough to keep it flying high.
– Industry analyst
What’s the deal? Well, the airline’s been pouring money into stock buybacks, which can prop up share prices but might not be sustainable. Combine that with operational challenges, and it’s no surprise analysts are skeptical about its near-term growth. For investors, this could mean it’s time to rethink holding onto this stock—or at least keep a close eye on it.
Align Technology: A Smile That’s Fading?
Another company that’s taken a hit is a leader in orthodontic technology. Its stock has plummeted 32% in 2025, and the latest earnings report didn’t help. The company missed both earnings and revenue forecasts, and its guidance for the current quarter—$965 million to $985 million—fell short of the $1.04 billion analysts expected. That’s a tough pill to swallow for a company once seen as a growth darling.
Analysts have downgraded the stock to a neutral rating, slashing price targets significantly. One analyst noted that the company’s growth story, once a Wall Street favorite, has been “challenged for years.” Perhaps the most interesting aspect is how this reflects broader market shifts—high-growth sectors aren’t immune to stumbles.
- Missed Expectations: Lower-than-expected earnings and revenue.
- Weak Guidance: Current quarter projections below analyst estimates.
- Stock Decline: A 32% drop in 2025 signals investor concerns.
For investors, this might be a signal to reassess. If a company’s growth trajectory is faltering, holding on in hopes of a rebound could be risky. But is it time to sell? That depends on your strategy, which we’ll explore later.
Lockheed Martin: Grounded Expectations
Even giants stumble sometimes. A leading defense contractor missed revenue expectations this quarter and lowered its full-year guidance, prompting a downgrade from buy to hold by one investment firm. The stock, down 8% this year, offers a solid 3% dividend yield, but analysts aren’t optimistic about growth.
We lack confidence in management’s ability to execute its multi-year growth plan, and further charges could be on the horizon.
– Financial analyst
The company’s challenges include execution risks and a lack of immediate catalysts for growth. With a revised price target suggesting flat performance ahead, this stock might not be the safe bet its dividend yield suggests. For conservative investors, that’s a tough call.
Why Double Misses Are a Big Deal
So, why should you care about double misses? They’re more than just bad news—they can signal deeper issues. A company missing revenue might be facing market headwinds, while an earnings miss could point to cost management problems. Together? It’s like a storm brewing on the horizon. Here’s a quick breakdown:
| Issue | Implication | Risk Level |
| Earnings Miss | Profitability concerns | Medium |
| Revenue Miss | Market demand issues | Medium |
| Double Miss | Systemic challenges | High |
Double misses often lead to analyst downgrades, price target cuts, and investor sell-offs. They can also erode confidence in management, which is tough to regain. For me, it’s like watching a friend make the same mistake twice—you start to question their judgment.
How to Spot Trouble Before It Hits
Wouldn’t it be great to dodge these bullets before they hit your portfolio? Here are some practical steps to identify potential double misses early:
- Track Analyst Expectations: Use financial news platforms to monitor consensus estimates for EPS and revenue.
- Watch Guidance: Companies often signal trouble in their quarterly guidance—pay attention.
- Monitor Revisions: Negative year-to-date revisions for future earnings can be a warning sign.
- Check Valuations: High price-to-earnings ratios, like 36x next year’s earnings, suggest overvaluation risks.
Pro tip: Don’t just rely on one source. Cross-check data from multiple analysts to get a clearer picture. It’s like getting a second opinion before a big decision—always worth it.
Should You Sell or Hold?
Here’s where it gets tricky. Selling a stock after a double miss might feel like the safe move, but is it always the right one? It depends on your investment goals. Are you in it for growth, income, or stability? Let’s break it down:
- Growth Investors: Double misses often signal stalled growth, making these stocks less attractive.
- Income Investors: Stocks with dividends, like the defense contractor’s 3% yield, might still be worth holding if the payout is secure.
- Value Investors: If the stock’s price drops enough, it could become undervalued—a potential opportunity.
Personally, I lean toward caution. A double miss can be a sign of bigger problems, and I’d rather protect my capital than hope for a turnaround. But every investor’s different, so weigh your risk tolerance carefully.
The Bigger Picture: Market Context
Zooming out, this earnings season has been a mixed bag. While most S&P 500 companies crushed it, the double misses stand out like sore thumbs. Market volatility, supply chain issues, and shifting consumer demands are all playing a role. For instance, the airline industry’s facing fuel cost pressures, while tech-driven companies like the orthodontics firm are grappling with innovation slowdowns.
Market dynamics are shifting, and companies that can’t adapt quickly are getting left behind.
– Market strategist
What does this mean for you? It’s a reminder that no stock is bulletproof. Even industry leaders can stumble, so diversification is key. Spreading your investments across sectors can cushion the blow when one stock tanks.
Lessons From the Trenches
I’ve been burned by a double miss before, and let me tell you, it’s not fun. The stock looked solid on paper, but missed expectations and a weak outlook sent it spiraling. The lesson? Don’t fall in love with a stock. Stay objective, and always have an exit strategy. Here’s a quick checklist to keep you grounded:
- Set Stop-Loss Orders: Protect yourself from big drops.
- Review Quarterly Reports: Dig into the details beyond the headlines.
- Stay Informed: Follow market news to catch early warning signs.
Think of it like dating—don’t ignore red flags just because you’re attached. A double miss is a big one.
Looking Ahead: What’s Next?
As we move through 2025, keep an eye on how these companies recover—or don’t. Will the airline streamline operations? Can the orthodontics firm reignite growth? Does the defense contractor have a plan to boost revenue? These are the questions investors need to ask. For now, caution is the name of the game.
In my opinion, the market’s too unpredictable to bet big on a single stock recovering from a double miss. Diversify, stay informed, and don’t be afraid to cut losses. The stock market’s a marathon, not a sprint, and smart moves now can set you up for long-term success.
Investing isn’t just about picking winners—it’s about avoiding losers too. Double misses are a wake-up call, and ignoring them could cost you. By staying vigilant, diversifying your portfolio, and keeping emotions in check, you can navigate this earnings season like a pro. What’s your next move?
