Keep in mind how earnings estimates are created.
Both company executives and brokerage analysts are doing their best to create conservative estimates that the company should easily beat. And when they fall short of those watered down estimates, then it points to one of two serious problems.
• Industry conditions have deteriorated and thus they missed their forecasts. This problem will most likely not correct itself in the near-term, leading to further disappointment.
• Company leaders are incompetent. Meaning that they are no good at estimating their own earnings. Or that their strategies for growth are ineffective.