Stocks declined on Monday as investors digested fresh earnings reports and large swings in the price of oil. The Dow Jones Industrial Average (DJINDICES:^DJI) and the S&P 500 (SNPINDEX:^GSPC) both fell slightly following the prior session's 1% bounce.
Today's stock market:
Energy stocks had a good day thanks to a 4% rebound in crude oil prices. Healthcare was the worst-performing segment, meanwhile, led by another drop for Bristol-Myers Squibb (NYSE:BMY).
Mattress Firm's cash out
Mattress Firm, the biggest mattress retailer in the U.S., saw its stock double after announcing it will merge with South African furniture giant Steinoff. The two companies reached an all-cash deal for Mattress Firm's shares valuing the company at $64 per share, a price the stock hasn't seen since last August.
The business hasn't been doing especially well lately. Comparable-store sales growth was barely positive in Q1 and declined by 1% in the quarter that just closed. At the time, CEO Steve Stagner admitted his team was "disappointed" in the results, but predicted a quick rebound.
Whether sales growth bounces back or not, Steinoff at least gets to extend its footprint into a highly competitive market. "This transaction will allow Steinhoff to not only enter the U.S. market with an industry-leading partner and a national supply chain, but it will also expand Steinhoff's global market reach in the core product category of mattresses," CEO Markus Jooste said in a press release.
Mattress Firm shareholders, meanwhile, get to cash out at a high point -- especially considering the company's recent struggles. The agreement looks like a done deal in any case -- both companies' boards are behind it, as are their respective management teams, and it is on track to close in the next few months.
Dean Foods' milk volume
Milk producer Dean Foods' stock fell 3% despite second-quarter earnings results that were right in line with management's prior guidance. Adjusted earnings came in at $0.38 per share, edging the $0.36 per share that executives forecasted back in May. Milk volume continued to decline, dropping to 632 million gallons from 653 million in the year-ago period. Growth in Dean Foods' flavored milk products couldn't completely offset the drop in plain milk demand.
Profitability jumped, though, thanks to a drop in milk costs and lower operating expenses. As a result, DF generated a 26% boost in net income to $33 million. "Our second quarter performance demonstrates our continued focus on driving strong operational and financial performance across all functions," CEO Gregg Tanner said in a press release.
Tanner and his team see these positive trends continuing into the coming quarter. Lower costs and expenses should boost profits to around $0.36 per share and volume trends are projected to improve slightly. Meanwhile, the company is busy integrating its latest acquisition, the Friendly's ice cream brand, into its operations so that its long-term future isn't so dependent on the shrinking demand for liquid milk.
Demitrios Kalogeropoulos has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not 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.