Why ConAgra Foods, La-Z-Boy, and Outerwall Tumbled Today

Even though the Fed sent the stock market higher, these stocks fell behind. Find out why.

Jun 18, 2014 at 8:34PM

Stocks closed sharply higher on Wednesday, with the Federal Reserve continuing to pull back from its quantitative easing program in anticipation of a healthier economic environment in the future. Even though some investors focused on slightly changed forecasts about the pace of future increases in the Fed funds rate, the general consensus appears to be that the Fed remains committed to keeping monetary policy accommodative for the foreseeable future. Still, not all stocks celebrated the news, and ConAgra Foods (NYSE:CAG), La-Z-Boy (NYSE:LZB), and Outerwall (NASDAQ:OUTR) all fell on the day.

Source: Wikimedia Commons.

ConAgra Foods dropped 7% as the agricultural giant warned that its income for the fiscal fourth quarter will fall short of what the company had expected previously. ConAgra shaved a nickel per share off its adjusted earnings estimate, with weakness coming from both sides of its business. On one hand, revenue from its consumer-food division wasn't as strong as it had expected. But the private-label food business it obtained from its merger with Ralcorp a year and a half ago has also had trouble producing the solid profits shareholders wanted to see. Analysts followed with downgrades, and ConAgra will have work to do to restore investor confidence in next week's formal earnings release.

La-Z-Boy sank 8% after the furniture company's earnings were the latest casualty of winter weather. La-Z-Boy said that its fiscal fourth-quarter same-store sales dropped by 0.9%, which was the first decline in comps in years. Moreover, La-Z-Boy expects future costs to rise, with raw materials such as leather and plywood seeing price pressures that could hurt margins going forward. La-Z-Boy has responded with price increases of its own, but with the choppiness of the economic recovery, it's unclear whether the company can make those gains stick. With the slow summer period coming, La-Z-Boy shareholders might have to wait a while to see a full recovery in the stock price.


Source: derrickcollins, Flickr.

Outerwall fell 6% in response to an analyst downgrade of the company behind the Redbox and Coinstar kiosks. The concern that Outerwall has to address is whether the movie-rental business will remain a viable profit-generator in light of the rising adoption of streaming video services. In order to keep growing, Outerwall needs to convince customers of the value proposition of physical media for entertainment over streaming, and that is increasingly becoming a tougher sell to tech-savvy consumers. Outerwall stock trades at a cheap earnings multiple, but that might just reflect fears that earnings might contract in future years despite analyst expectations to the contrary.

Your cable company is scared, but you can get rich
You know cable's going away. But do you know how to profit? There's $2.2 trillion out there to be had. Currently, cable grabs a big piece of it. That won't last. And when cable falters, three companies are poised to benefit. Click here for their names.


Dan Caplinger and The Motley Fool have no position in any of the stocks mentioned. 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.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.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.

©1995-2014 The Motley Fool. All rights reserved. | Privacy/Legal Information