Wall Street put on its happy face on Tuesday, and the Dow Jones Industrials and S&P 500 both finished at all-time highs. The stock market ended a recent downward streak as investors responded positively to benign economic data that suggested a possible pause in interest rate increases from the Federal Reserve. At the same time, hard-hit technology stocks generally rebounded from their losses over the past two days, pointing to the likelihood that the downdraft will prove to be short-lived.
Still, some stocks didn't manage to participate in today's rally, and The Cheesecake Factory (CAKE 0.99%), Science Applications International (SAIC -1.20%), and Essendant (ESND) were among the worst performers on the day. Below, we'll look more closely at these stocks to tell you why they did so poorly.
Cheesecake Factory falls flat
Shares of Cheesecake Factory dropped 10% after the company updated its outlook for its fiscal second quarter. The restaurant chain said that it now expects comparable sales for the quarter to be down 1%, and it believes that the sluggish sales will have an impact on margin and earnings per share. As CEO David Overton said, "Half of our regions [are] posting positive comparable sales for the period, including key markets of California, Texas, and Florida." However, more broadly, Cheesecake Factory is dealing with unfavorable weather in several regions that has reduced usage of the restaurant chain's patios, especially in the East and the Midwest. Investors took the warning in stride, but with the restaurant industry already suffering from consumer-related headwinds, weather and other factors aren't what shareholders want to see right now.
Image source: The Cheesecake Factory.
SAIC slides on sluggish results
Science Applications International stock fell 9.5% in the wake of the company;s release of fiscal first-quarter financial results. The technology specialist and defense contractor said that sales fell 9% from the year-ago quarter, sending adjusted operating income down by 14%. SAIC managed to boost net income because of a one-time accounting-method adoption, but investors generally weren't happy with the company's performance. CEO Tony Moraco said that the shortfall in margin performance came from "increased costs and investment on our platform integration programs as we work toward completing Marine Corps prototype vehicles." Yet even though the company is optimistic that its efforts to improve its operational efficiency will be rewarded, shareholders seem skeptical about SAIC's ability to get key metrics moving back in the right direction, especially in light of past performance.
Essendant makes a change at the top
Finally, shares of Essendant dropped 10%. The wholesale distributor of business products said that CEO Robert Aiken Jr. had resigned effective immediately, with the intent of pursuing opportunities outside the company. Essendant named Richard Phillips as interim CEO, noting that his experience as group president of Essendant's industrial division should help the executive hit the ground running. In the words of board chairman Charles Crovitz, Phillips "has demonstrated exceptional leadership in key growth areas since joining Essendant in 2013, including guiding the expansion of our e-commerce relationships and driving improved performance in industrial." However, shareholders were shocked by the move, and with a search for a permanent CEO in place, it's unclear how long Essendant might be stuck in limbo as a result.
