The stock market fell sharply on Tuesday, as investors reacted negatively to growing anxiety about the final week of the presidential election campaign. Major market benchmarks closed lower by as much as 0.75%, but several stocks posted even larger losses, including L Brands (BBWI -1.73%), Brookdale Senior Living (BKD 0.52%), and Arconic. Let's look more closely at these stocks to tell you why they did so poorly.
L Brands cuts its guidance
L Brands fell 8% after issuing its October sales estimates and updating its third-quarter earnings guidance in advance of its quarterly financial report later this month. The company behind Victoria's Secret and Bath & Body Works said that it expects October comparable sales to rise 1% overall. L Brands pointed to a 6% rise in comps at Bath & Body Works, but that was largely offset by a 2% comps decline at Victoria's Secret. In addition, L Brands now expects to earn just $0.40 per share in the third quarter, which was the low end of its previous range of guidance and down from last year's $0.55 per share in earnings.
Brookdale falls on earnings, deal
Brookdale Senior Living plunged 18% after reporting its third-quarter results and entering into an agreement with a Blackstone Group real estate fund and healthcare REIT HCP. Revenue for the quarter rose only minimally, and Brookdale reduced its guidance on total revenue from senior housing and ancillary services as well as adjusted pre-tax operating earnings. In adding up its adjusted cash flow from operations figures, Brookdale's new guidance amounts to $35 million to $40 million less than previously expected. Some of that comes as a result of the Blackstone/HCP deal, whereby Brookdale will take a 15% interest in a joint venture to own 64 properties that HCP currently leases to Brookdale. On the whole, investors took the overall impact on Brookdale to be negative, despite what Brookdale said would be improved cash flow, attractive return on investment, and reduced leverage.
Arconic loses the popularity contest
Finally, Arconic fell 12%. The value-add products spinoff from Alcoa (AA) had its first day of trading as an independent company today, but the price fell substantially from where it had traded in the when-issued market. Many believe that Arconic will prove to have much greater growth prospects than Alcoa, because Alcoa will focus on the commodity side of the business. However, today was a strong day for commodities, and so it's possible that investors simply wanted to shift their focus away from the high-end manufacturing side of the company toward more fundamental exposure to aluminum and other lightweight metals. Whatever the reason, it will be interesting to see how Arconic and Alcoa trade relative to each other in the first few days following their separation.