Big-Box Retailers With the Blues Today

Although we don't believe in timing the market or panicking over daily movements, we do like to keep an eye on market changes -- just in case they're material to our investing thesis.

With the noise from Washington finally quieting down, investors can get back to focusing on what really matters: earnings. And as they do so today, the major indexes are mixed. As of 12:45 p.m. EDT the Dow Jones Industrial Average (DJINDICES: ^DJI  ) is flat, while the S&P 500 is up 0.4% and the Nasdaq has jumped 0.9% higher. For more on which recent earnings reports are hurting the Dow today, click here.

Let's see which big retailers are struggling this afternoon.

Shares of Costco (NASDAQ: COST  ) are down 0.9% this afternoon, likely because of a Salmonella scare at one of the company's stores in San Francisco. Yesterday that location recalled 14,000 units of rotisserie chicken products that may have been contaminated according to the Department of Agriculture. The company initially recalled chicken products on Oct. 12, but after Costco consulted the California Public Health Department, the recall was expanded yesterday. As a result of the chicken scare, investors have sold off food producers today: Tyson Foods is down 4.2%, Sanderson Farms has lost 2.8%, and Pilgrim's Pride is off by 5.4%.  

Two other retail giants are struggling today: Shares of Home Depot (NYSE: HD  ) are down 0.7%, while Lowe's (NYSE: LOW  ) is off by 2.5%. With little news pertaining directly to the companies today, it's hard to say what's affecting the stocks, but they have received some bad news over the past few days in terms of housing data. On Wednesday the Mortgage Bankers Association reported that refinancing and home mortgage applications increased a mere 0.3% the previous week after rising 1.3% the week of Oct. 4. Additionally, purchase applications using government assistance fell 7% during the week, which was the lowest level we had seen since December 2007. 

This data could be causing investors to question the strength of the home improvement stores and whether they can live up to the growth that has been built into their the stock prices. Home Depot currently trades at 24 times trailing-12-month earnings and 17 times forward earnings, while Lowe's trades at 24 times trailing earnings and almost 18 times future earnings, which looks pricey compared to other big-box retailers.

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