• Subscribe
  • Log In
  • Home
  • Daily Diary
  • Asset Class
    • U.S. Equity
    • Fixed Income
    • Global Equity
    • Commodities
    • Currencies
  • Sector
    • Basic Materials
    • Consumer Discretionary
    • Consumer Staples
    • Energy
    • Financial Services
    • Healthcare
    • Industrials
    • Real Estate
    • Technology
    • Telecom Services
    • Transportation
    • Utilities
  • Latest
    • Articles
    • Video
    • Columnist Conversations
    • Best Ideas
    • Stock of the Day
  • Street Notes
  • Authors
    • Doug Kass
    • Bruce Kamich
    • Jim Cramer
    • Jim "Rev Shark" DePorre
    • Helene Meisler
    • Jonathan Heller
    • - See All -
  • Options
  • RMPIA
  • Switch Product
    • Action Alerts PLUS
    • Quant Ratings
    • Real Money
    • Real Money Pro
    • Retirement
    • Stocks Under $10
    • TheStreet
    • Top Stocks
    • Trifecta Stocks
  1. Home
  2. / Investing
  3. / Stocks

Fitbit Traders Throw Fit Over Its Guidance While Newell Brands Beats Street

Shares of Fitbit were hammered on Thursday after the smartwatch maker lowered expectations for the full year.
By JONATHAN HELLER
Aug 02, 2019 | 10:00 AM EDT
Stocks quotes in this article: FIT, NWL

Earnings season rolls on, and Thursday it was hammer time for Fitbit Inc. (FIT) . The company released better-than expected results for the second quarter and promptly got whacked.

Fitbit shares fell more than 21% to an all-time low as the company cut forward guidance. Fitbit's loss for the quarter of 14 cents a share was better than the 18-cent consensus, while revenue of $313.6 million was $2 million ahead of estimates, but these numbers were all but irrelevant.

The thing that sunk the shares, in addition to cumulative and growing impatience about whether Fitbit can deliver a positive bottom line, was lowered expectations for the full year. Sales of the company's Versa Lite Smartwatch, which was rolled out in March, have been disappointing to say the least. FIT now expects that full-year 2019 revenue will be in the range of $1.43 billion to $1.48 billion, down from previous estimates of $1.52 billion to $1.58 billion. In addition, gross margins are expected to be in the 35% range, down from the previous 40% Fitbit expected. In reaction, Fitbit said it will cut operating expenses by $20 million to $50 million.

Fitbit ended the quarter with $565 million, or about $2.20 per share, in cash and short-term investments. With shares closing at $3.31 on Thursday, that shows just how negative the markets are about the name. Granted, companies that are losing money will burn through cash, but in this case, it appears that the cash burn for FIT in 2019 has been front-loaded into the first half of the year as the company expects to end the year with between $570 million and $600 million in cash and short-term investments. With an enterprise value of less than $300 million it is time for this company to be sold; it simply should not be public.

Here on Friday morning, Newell Brands Inc. (NWL) reported second-quarter earnings of 45 cents per share, beating consensus estimates by nine cents, on revenue that was in line with expectations. Newell made further progress on the debt front, reducing it by $517 million since the end of last quarter, while cash grew by about $260 million. Newell ended the quarter with $625 million in cash and $6.75 billion in debt; while it still has work to do here, Newell is making progress. Debt was at $10.5 billion one year ago.

Full-year earnings per share are still expected to be in the range of $1.50 to $1.65, putting the forward price-to-earnings (P/E) ratio in the 8 to 9 range, while shares currently yield 6.9%. There's no doubt that Newell has been a reclamation project and its stock performance has been disappointing, but this appears to have been a decent quarter. While still in business divestiture mode, the company announced it will not be selling its Rubbermaid Commercial Products business (it had been included in discontinued operations and classified on the balance sheet as "held for sale"), believing it will be accretive to earnings beginning in 2020.

Get an email alert each time I write an article for Real Money. Click the "+Follow" next to my byline to this article.

At the time of publication, Heller was long FIT and NWL.

TAGS: Earnings | Investing | Stocks | Value Investing | Consumer | Health Care Equipment & Services | Household Products | Real Money | Consumer Products | Consumer Discretionary

More from Stocks

Target's Charts Are Getting Out of Range for the Bulls

Bruce Kamich
Mar 1, 2021 11:45 AM EST

I would stand aside through this earnings release.

The Bond Market vs the Fed

Bob Lang
Mar 1, 2021 11:30 AM EST

Bond holders fear inflation with a passion.

Verizon: The Risk Is to the Upside

Stephen Guilfoyle
Mar 1, 2021 11:00 AM EST

There is potential to turn VZ from a stable telecom into a 'growthy' type name.

There's an Oversupply of Positive Action Right Now

James "Rev Shark" DePorre
Mar 1, 2021 10:39 AM EST

The longer this continues, the more anxiety there will be about being underinvested.

Rocket Companies Is Not Ready to Blast Off

Bruce Kamich
Mar 1, 2021 10:36 AM EST

The company went public seven months ago.

Real Money's message boards are strictly for the open exchange of investment ideas among registered users. Any discussions or subjects off that topic or that do not promote this goal will be removed at the discretion of the site's moderators. Abusive, insensitive or threatening comments will not be tolerated and will be deleted. Thank you for your cooperation. If you have questions, please contact us here.

Email

CANCEL
SUBMIT

Email sent

Thank you, your email to has been sent successfully.

DONE

Oops!

We're sorry. There was a problem trying to send your email to .
Please contact customer support to let us know.

DONE

Please Join or Log In to Email Our Authors.

Email Real Money's Wall Street Pros for further analysis and insight

Already a Subscriber? Login

Columnist Conversation

  • 08:09 AM EST GARY BERMAN

    Monday Morning Fibocall for 3/1/2021

    Always a good idea to know where our bounce zones ...
  • 11:51 AM EST REAL MONEY

    Watch Bob Lang and Doug Kass Discuss Short-Selling!

    Bob Lang and Doug Kass with an engaging and educat...
  • 11:32 AM EST JAMES "REV SHARK" DEPORRE

    This Weekend on Real Money

    Navigating a Market Correction
  • See More

COLUMNIST TWEETS

  • A Twitter List by realmoney
About Privacy Terms of Use

© 1996-2021 TheStreet, Inc., 225 Liberty Street, 27th Floor, New York, NY 10281

Need Help? Contact Customer Service

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data & Company fundamental data provided by FactSet. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by FactSet Digital Solutions Group.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

FactSet calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.

Compare Brokers

Please Join or Log In to manage and receive alerts.

Follow Real Money's Wall Street Pros to receive real-time investing alerts

Already a Subscriber? Login