Why RadioShack, McDermott, and Gentiva Health Solutions Tumbled Today

Stock-market investors were almost unanimously in a good mood Tuesday, as signs of a potentially non-combative resolution to the crisis in the Crimea allowed markets in most countries to rebound substantially today. Yet even though the S&P 500 reached a new all-time record high and the Dow climbed more than 225 points on the day, RadioShack (NYSE: RSHCQ  ) , McDermott (NYSE: MDR  ) , and Gentiva Health Solutions (NASDAQ: GTIV  ) were unable to participate in the festive mood on Wall Street and instead posted substantial losses today.

RadioShack (RSH) plunged 17% as the electronics retailer announced plans to close as many as 1,100 stores, representing more than a fifth of its overall store count. Despite efforts to revamp the company's image and focus on more profitable opportunities, RadioShack said that its same-store sales plummeted 20% during its most recent quarter, with large losses again raising concerns among long-term investors about how long the retailer can continue to absorb red ink. Meanwhile, with the store closings reportedly representing a violation of bond covenants on the electronics retailer's debt, RadioShack could have even more problems to deal with in the near future.

McDermott (MDR) dropped 8% after the engineering firm reported poor quarterly results and withdrew its future guidance for the company. Revenue plunged by nearly half, leading to a dramatic loss for the quarter, and even new CEO David Dickson noted that "McDermott is at a strategic inflection point" in arguing that it has resolved many outstanding issues that should allow for further future growth. Yet investors weren't heartened by the company's lack of confidence in choosing to suspend providing financial guidance in the future, and analysts followed up with downgrades of the stock. With participants in the energy industry getting increasingly nervous about the sustainability of its boom times in the future, McDermott is just the latest example of stocks in the area that have been hit hard.

Gentiva (GTIV) fell 10% after the home-health services provider said that it had lost money during the fourth quarter, with the company blaming its corporate restructuring efforts for the losses. With closings and consolidations of dozens of its locations, Gentiva didn't show nearly the success that investors expected from the company, especially given the demographic tailwinds that should be causing the home-health and hospice-care industry to grow dramatically. Yet as health-care reform from the Affordable Care Act and Medicare weigh on profits, Gentiva faces the challenge of navigating changing conditions to find the best way to make money.

Don't miss out on winning stocks
Even good stocks have bad days. There's a huge difference between a good stock and a stock that can make you rich. The Motley Fool's chief investment officer has selected his No. 1 stock for 2014, and it's one of those stocks that could make you rich. You can find out which stock it is in the special free report "The Motley Fool's Top Stock for 2014." Just click here to access the report and find out the name of this under-the-radar company.

Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2863931, ~/Articles/ArticleHandler.aspx, 8/30/2015 6:33:59 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Dan Caplinger

Dan Caplinger has been a contract writer for the Motley Fool since 2006. As the Fool's Director of Investment Planning, Dan oversees much of the personal-finance and investment-planning content published daily on With a background as an estate-planning attorney and independent financial consultant, Dan's articles are based on more than 20 years of experience from all angles of the financial world.

Today's Market

updated 1 day ago Sponsored by:
DOW 16,643.01 -11.76 -0.07%
S&P 500 1,988.87 1.21 0.06%
NASD 4,828.33 15.62 0.32%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

12/31/1969 7:00 PM
GTIV $0.00 Down +0.00 +0.00%
Gentiva Health Ser… CAPS Rating: ***
MDR $4.66 Up +0.14 +3.10%
McDermott Internat… CAPS Rating: ***
RSHCQ $0.13 Up +0.02 +0.00%
RadioShack CAPS Rating: *