Why Nutrisystem, Catamaran, and Swift Energy Tumbled Today

Even on a strong day in which the S&P 500 hit its highest level ever, poor outlooks for these three companies sent their stocks plunging. Find out more about why these stocks got left out of Thursday's bull-market run.

Feb 27, 2014 at 8:31PM

The stock market broke out of its holding pattern Thursday, posting a solid advance of about half a percent and sending the S&P 500 to its highest close ever. Reduced levels of nervousness about the winter-induced economic slump in the U.S. helped boost stocks' prospects, especially with help from the Senate testimony of new Fed chief Janet Yellen. But none of those tailwinds helped Nutrisystem (NASDAQ:NTRI), Catamaran (NASDAQ:CTRX), or Swift Energy (NYSE:SFY) avoid steep losses today after announcing disappointing news.

Nutrisystem declined 10% despite a fourth-quarter earnings report that included year-over-year revenue growth and a reversal of last year's loss with a modest gain. Yet even though the weight-management company projected earnings for the 2014 year of $0.51 to $0.61 per share, up about 25% to 50% from 2013's final results, investors had wanted about 65% earnings growth on 14% sales gains. As a result, they're reining in their expectations, and the stock dropped as a result. With increasing competition in the weight-management space, moreover, Nutrisystem will have to work hard to maintain even that level of revenue growth in the future.

Catamaran fell 11% on a similar forecast for smaller 2014 profits than investors had expected to see. The pharmacy-benefits management provider saw sales jump 36% for the quarter, as net income soared 75%. Yet investors weren't entirely comfortable with Catamaran's earnings projections for 2014 of between $2.04 and $2.19 per share on an adjusted basis, with the figures suggesting that the PBM's margins might come under more pressure in the year to come. Pharmacy benefits managers have been a key component of cost-saving measures for the health-care industry lately, but shareholders clearly fear that Catamaran's impressive run might be ending.

Swift Energy dropped 16% after the small oil and gas company disappointed investors with its fourth-quarter results. Swift announced a loss stemming from a large writedown of its energy assets, but even adjusting for those figures, net income dropped by almost half from the year-ago quarter. For the full year, Swift only managed to increase production by about half a percent, and the company said it wasn't happy with the performance it has gotten from its Artesia Wells area assets. With revenue falling 8% on lower production, Swift needs to find ways to get itself growing again to avoid even further declines in the future.

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Dan Caplinger has no position in any stocks mentioned. The Motley Fool recommends and owns shares of Catamaran. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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