Wall Street suffered a down day on Tuesday, responding with some general uneasiness about potentially important geopolitical events going on this week. Major benchmarks closed the day down modestly, with the Dow falling almost 50 points and other key indexes posting similar declines in percentage terms. Most market participants pointed to uncertainties about the investigations of the Trump administration and the U.K. parliamentary election as having potential ramifications for stock movements in the future, but some investors just seemed ready for the market to take a pause after its most recent run to record highs.
Nevertheless, some companies suffered bad news that hurt their share prices more extensively, and Michaels Companies (MIK), Chicago Bridge & Iron (CBI), and HD Supply Holdings (HDS) were among the worst performers on the day. Below, we'll look more closely at these stocks to tell you why they did so poorly.
Michaels faces a tough quarter
Shares of Michaels finished down 8% after the company announced its first-quarter financial results. The arts and crafts retailer saw flat sales from year-ago levels, as comparable-store sales slumped to offset the opening of 12 net new store locations. Rising overhead expenses helped reduce operating income, and weakness in the value of the Canadian dollar hit the company's results. Michaels remains optimistic that its results will improve in the second half of the year, and CEO Chuck Rubin said that he was "encouraged with the improving trend in customer transactions this quarter, especially given the headwinds we faced as we anniversaries last year's coloring trend." Yet investors didn't seem as confident about Michaels being able to achieve its long-term goals, continuing a trend that for some has lasted since the company went public in 2014. With near-term guidance pointing to expected declines in comps for the second quarter, those looking for more growth from the retailer simply weren't satisfied with Michaels' outlook.
Image source: Michaels Companies.
Chicago Bridge raises concerns
Chicago Bridge & Iron stock fell 10% in the wake of downbeat comments from a stock analyst company. Analysts at Macquarie Group dramatically reduced their target price for shares of the infrastructure specialist, slicing $6.50 per share from their previous projection and now expecting $11.50 per share. Macquarie also retained its underperform rating, arguing that a more appropriate way of valuing the stock would incorporate the maximum amount of capital that Chicago Bridge took from its credit facilities during the quarter rather than the quarter-end number. Many have hoped that the Trump administration's promised infrastructure initiatives would bolster the company's prospects, but until that happens, investors will likely be cautious about Chicago Bridge's future growth.
HD Supply makes a sale
Finally, shares of HD Supply Holdings plunged close to 18%. The company issued a couple of news items today, including its first-quarter financial results and the sale of its waterworks business unit. HD Supply said that net sales climbed 5%, and adjusted net income rose by nearly a quarter from the year-ago period. Yet investors had wanted more from the industrial distributor, and second-quarter guidance was also weaker than anticipated. HD Supply's sale of its waterworks division to a private equity investment company will bring in $2.5 billion, and HD Supply shareholders will share in some of the benefit through anticipated stock buybacks. Yet the move essentially gives up on potential upside from anticipated increases in infrastructure spending in the U.S., and some investors seemed to think that was a short-sighted move from HD Supply.
