Why ExOne, Cato, and Walter Energy Tumbled Today

On Thursday, the stock market managed to regain much of the ground it lost after yesterday's shock from the Fed, as market participants started to discount just how likely it was that interest rates would rise as quickly as Fed Chair Janet Yellen's comments suggested yesterday. Yet, even though the Dow was substantially higher today, the good mood wasn't enough to lift shares of ExOne (NASDAQ: XONE  ) , Cato (NYSE: CATO  ) , or Walter Energy (NYSE: WLT  ) , all of which suffered big losses on the day.

ExOne fell almost 10% after the company reported its fourth-quarter earnings last night. The 3-D printing company saw sales of its printers fall 22%, and full-year overall revenue came in fully 20% weaker than its previous guidance had suggested. Moreover, ExOne pointed to further weakness in 2014, calling into question the company's potential for high growth. The problem ExOne faces is that its printers are very expensive. One way it's trying to address that situation is to make production service centers available where customers can use company-owned 3-D printers rather than buying their own outright. Nevertheless, the results show just how competitive the industry is right now, and ExOne needs to find ways to differentiate itself if it wants to win the 3-D war.

Cato dropped 13% as the women's apparel retailer reported disappointing earnings for the holiday quarter. Same-store sales fell 3%, contributing to an overall drop in revenue of 7%, and income fell by more than half. CEO John Cato blamed the results on the "continuing difficult economic situation our customers have faced," pointing to cost-cutting measures and internal investment to try to improve its results. Yet, with the company not expecting e-commerce efforts to have a significant impact on its results this year, investors clearly have a while to wait before they see the fruits of Cato's efforts.

Walter Energy plunged 20% as the struggling coal company dealt with fallout following negative sentiment from analysts at Bank of America. B of A cited depressed conditions for the industry going forward, with stagnant prices for metallurgical coal making Walter Energy's efforts to recover from its current cash crunch more difficult. Meanwhile, Walter Energy also announced that it had priced two new debt offerings, and the fact that it had to use payment-in-kind-toggle financing suggests potential trouble in raising capital. If industry conditions don't improve in the next several years, Walter Energy could face increasing difficulty, and that could create further losses for shareholders and bond investors alike.

Find better stocks for your portfolio
Opportunities to get wealthy from a single investment don't come around often, but they do exist, and our chief technology officer believes he's found one. In this free report, Jeremy Phillips shares the single company that he believes could transform not only your portfolio, but your entire life. To learn the identity of this stock for free and see why Jeremy is putting more than $100,000 of his own money into it, all you have to do is click here now.


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.

DocumentId: 2884138, ~/Articles/ArticleHandler.aspx, 7/26/2014 6:31:31 AM

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...


Advertisement