Last week, I highlighted 15 US stocks that have created the most shareholder value over the 10-year period from 2015 through 2024, focusing on market appreciation in dollars. This time, I conducted a similar exercise from the opposite point of view to identify stocks that eroded value instead of creating it. To find them, I started by sorting through Morningstar’s US equity database to find companies with the largest drops in market capitalization, which reflects the current stock price multiplied by total shares outstanding, over the same period. To get a more accurate picture of value destruction, I added back the total value of dividends paid and stock spinoffs, which partially offset the market-cap declines.
The Results
The graph below shows the 15 stocks that have destroyed the most value for shareholders based on these metrics.
Top 15 Value-Destroying Stocks Over the Past 10 Years
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As a group, the value destroyers wiped out an estimated $370.9 billion in shareholder wealth over the past 10 years. That’s a big number, but far less than the estimated $20.8 trillion in wealth created by the top 15 stocks on the positive side. This reflects a few different factors. First, companies with outstanding financial results and share-price performance can continue to outshine their competitors over many years. While it’s impossible to lose more than 100% of your initial investment in a stock (unless you’re wading into risky territory like derivatives and leverage), winning stocks can have upside potential well in excess of their initial value. Second, the odds of experiencing a loss in any individual stock are relatively high, but value destruction can be somewhat limited if a stock never reached a large market cap to begin with.
Many of these companies are large-cap stocks that once dominated their industries. Semiconductor chipmaker Intel INTC, for example, previously dominated the technology sector and ranked as one of the 10 largest stocks in the United States based on market capitalization. Over the 10-year period ended in 2024, the company lost an estimated $21.7 billion in shareholder value amid increased competition from companies such as Nvidia NVDA and Advanced Micro Devices AMD.
While the remaining companies span a motley assortment of industries, sectors, and underlying problems, many of them have a common thread: a lack of economic moat, or sustainable competitive advantage. Eleven of the companies on the list have no economic moat, and another three—Biogen BIIB, CVS Health CVS, and Schlumberger SLB—have narrow economic moats. Only one company on the list—biotech drugmaker Gilead Sciences GILD—currently has a Morningstar Economic Moat Rating of wide. Morningstar analyst Karen Andersen points to its strong portfolio of patented treatments for HIV and liver diseases, as well as a promising oncology pipeline. Moats were much more prevalent on my list of wealth creators, with 12 of the 15 garnering wide economic moat ratings based on our analysts’ assessments.
Economic Moat and Growth Statistics
Economic Moat and Growth Statistics
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Another common factor: deteriorating fundamentals. As shown in the table above, several of the value destroyers suffered declining revenue, operating income, and/or free cash flow over the past 10 years. Investors responded to these worsening metrics by bidding down the stock prices.
What Went Wrong?
It’s tough to generalize about what led to these companies’ falloffs. Just as there are many different paths to greatness, there are many paths to value destruction. But in digging into these companies’ travails, a few issues surfaced more than once.
- Acquisitions that failed to create shareholder value. CVS and Walgreens Boots Alliance WBA have both made major acquisitions (Aetna and a large group of stores from Rite Aid, respectively) that failed to generate as many benefits as originally anticipated. Similarly, American Airlines AAL merged with US Airways in 2013 but struggled to integrate operations for the two airlines. Schlumberger took a massive write-off of $13 billion in 2019 to account for the decline in its acquired operations in the American pressure pumping business.
- Failure to keep up with changes in consumer preferences. Paramount Global PARA, for example, has watched its net income shrink as viewers have abandoned traditional television in favor of streaming services. Both Walgreens and CVS Health have lagged as consumers have shifted toward online services for prescriptions and other products. Under Armour UA failed to keep up with trends in mainstream apparel, such as the growth in athleisure wear that blends athletic functionality with comfort and fashion.
- Challenging external factors. As a leading oilfield-services company, Schlumberger is heavily dependent on energy prices. The oil price collapse between 2014 and 2016 took a heavy toll on its revenue and profitability. Like other airlines and travel-related companies, American Airlines struggled amid the covid-19 pandemic in 2020 and 2021.
- Lack of success in developing new products. Once a biotech darling, Biogen has suffered several setbacks in product development. It was counting on a new Alzheimer’s disease medication to replace falling revenue from multiple sclerosis drugs, but progress on the drug stalled out at various points. After numerous controversies and setbacks with Medicare coverage, Biogen announced about a year ago that it would discontinue clinical trials.
Looking Ahead
Shareholders in these 15 companies have suffered greatly over the past 10 years. But as I pointed out in my previous article, what really matters for investors considering a new purchase is a company’s future prospects and whether the current stock price offers a margin of safety.
Morningstar Ratings and Fair Value Estimates
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On that front, the wealth destroyers look more promising. Six of the 15 have Morningstar Ratings of 3 stars, indicating that they’re neither significantly undervalued nor overvalued based on our analysts’ assessments. Eight others—Biogen, CVS Health, Macy’s M, NOV NOV, Paramount Global PARA, Perrigo PRGO, Schlumberger, and Walgreens—are currently trading at modest discounts to our estimates of their value, earning them 4-star ratings. Under Armour is trading at a more significant discount and earned a 5-star rating as of this writing.
The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar's editorial policies.
