K12 Slumps on Controversy, Roundy's in the Red on Dilution

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.

The stock market closed modestly lower today, as Wall Street awaited earnings reports and important economic data due later in the week. The ADP employment report came out today, estimating private payroll growth in January at 175,000, which was slightly higher than expected. We'll find out what the Bureau of Labor Statistics, or BLS, pegs private payroll growth at on Friday; investors will take that number more seriously. Last month, ADP put private payroll growth at 238,000, a far cry from the official BLS figure of 87,000, so you can understand why investors take these estimates with a grain of salt. The Dow Jones Industrial Average (DJINDICES: ^DJI  ) lost 5 points, or less than 0.1%, to end at 15,440.

Wall Street cautiously bid Walt Disney (NYSE: DIS  ) stock higher on Wednesday, as shares added 1% ahead of its afternoon earnings report. Those betting on an impressive quarter bet correctly, it turns out, as Disney shares were up as much as 2.5% in after-hours trading. The company's majority stake in global sports network ESPN, as well as the unexpected success of its blockbuster holiday animated film Frozen, both helped to boost earnings. Net income rose by more than 30% in the most recent quarter, as earnings per share of $1.02 breezed past Wall Street's $0.92 EPS estimates. There's probably not a more dominant entertainment powerhouse in the world today, and judging by Disney's strong quarter, the show's not over yet.

Roundy's (NYSE: RNDY  ) stock, on the other hand, has been putting on quite an ugly show in recent days. Shares of the grocery chain shed 4.4% Wednesday, marking its fourth straight day in which the stock's fallen by 3% or more. Roundy's announced on Monday that it would be selling between 2.95 million and 4.27 million shares -- depending on whether underwriters decide to purchase additional shares -- of its common stock, which is dilutive for current shareholders. The move is intended to finance the grocer's expansion efforts, which recently included a move to buy a number of Chicago locations from Safeway

Finally, shares of the tech-based education company K12 (NYSE: LRN  ) tumbled 5.4% today, as fallout over its poor 2014 fiscal second quarter rippled through markets. While sales were up nearly 9% from the same period last year, K12 lost $3.7 million last quarter, a far cry from the $9.5 million gains from a year before. On top of this, the last week has seen a flurry of law firms encouraging investors to file suit against the company for breaking federal securities laws. The accusers allege that K12 failed to disclose truly accurate revenue guidance and student enrollment information, causing the stock to plunge nearly 40% on October 9, 2013, when the company issued revenue forecasts far below analyst estimates. Who knows how much validity there is behind these claims -- they may be frivolous or entirely valid. For now, the only thing that's certain is that these accusations aren't helping the stock price.

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