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.
On Thursday, the losing streak for the stock market reached three days, as the Dow succumbed to another triple-digit decline, while the S&P 500 and Nasdaq Composite posted more modest drops. The broader market suffered from general uncertainty about whether a change in Fed policy will reverse the course of the nearly five-year-long bull market. But lululemon athletica (NASDAQ: LULU), SunEdison (NYSE: SUNE), and IAMGOLD (NYSE: IAG) saw much more dramatic declines, all falling more than 10% on the session.
For lululemon, the stock's 12% decline resulted from gloomy guidance for the yoga-apparel retailer's holiday quarter. The company said earnings would come in between $0.78 and $0.80, about 5% to 7% below what investors had hoped to see. Also, lululemon said sales would fall well short of estimates, as well, with a range about 6% below investor expectations. The big question for long-term investors is whether a new CEO can help fight back against tough competition and resolve quality-control issues that have plagued lululemon all year. If so, then the stock might well be a bargain at current levels.
SunEdison dropped more than 10% after the solar company reduced its guidance for the current quarter and full year. The solar company cut its revenue forecasts by $15 million, citing a poor environment for semiconductor-materials sales. In addition, SunEdison said it would refinance its capital structure, issuing new convertible notes, to redeem outstanding notes and term loans. Presumably, the move will end up saving SunEdison some money in interest costs, but carries with it the possibility of dilution if the company's planned convertible note hedge positions don't entirely offset the potential dilutive effect.
IAMGOLD dropped 11% on a terrible day for the gold market, with bullion falling $30 per ounce. The gold miner said that it would suspend its dividend, which had carried a yield of 5.5%. Despite cost-cutting moves expected to reduce expenses by $100 million this year, CEO Steve Letwin said that the move would allow IAMGOLD to conserve cash while gold prices remain low. In the long run, the move might be positive for IAMGOLD shareholders if it allows the company to take advantage of poor industry conditions to make beneficial strategic moves.
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