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Why Denbury Resources, IDT, and Duluth Holdings Slumped Today

By Dan Caplinger – Jun 7, 2017 at 5:00PM

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On a positive day for the market, these stocks fell. Find out why.

Wednesday was a quiet but positive day for the market, although modest gains for the major benchmarks hid disparities in the performance of various sectors. Weak data from the energy sector had an impact on stocks in that industry, but more favorable speculation about what the Federal Reserve might do with interest rates at the June meeting of its Federal Open Market Committee helped support financial stocks. Despite modest gains for the broader market, some individual stocks suffered big losses. Denbury Resources (DNR), IDT (IDT 1.72%), and Duluth Holdings (DLTH 1.52%) 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.

Denbury drops along with crude

Shares of Denbury Resources fell 13%, dropping in sympathy with most of the rest of the energy industry. Crude oil prices fell more than $2 per barrel on Wednesday, finishing below the $46 mark and raising new concerns about the viability of the more marginal businesses in the oil and gas exploration and production space. Oil stockpiles climbed for the first time in two months, defying usual seasonal drawdowns and reflecting doubts about OPEC's resolve to keep production under control. At the same time, inventories of gasoline and other refined products also rose. As U.S. production has picked up, imports are on the decline, but Denbury and other producers still have to deal with drops in prices for its production. Denbury has done well to get out from under its massive debt load, but it can't afford to see oil's gains go up in smoke if it wants to remain successful.

Denbury facility at night.

Image source: Denbury Resources.

IDT suffers big losses

IDT stock plunged more than 20% in the wake of poor results in the company's fiscal third-quarter financial report. The telecommunications and payment services company saw sales climb 4%, but IDT swung from a year-ago profit to a net loss. Even after accounting for extraordinary items, IDT's adjusted net income was down by nearly a quarter. CEO Shmuel Jonas was still pleased with the company's results, pointing to successes in its Boss Revolution money transfer business and IDT's ongoing efforts to streamline its business and focus more squarely on its most promising strategies. Yet investors didn't seem impressed by plans to spin off its real estate assets into a separately traded stock later in 2017, and IDT will have to show greater telecom growth in order to satisfy its shareholders going forward.

Duluth has a profit problem

Finally, shares of Duluth Holdings sank 19%. The company behind retailer Duluth Trading Company reported a solid gain in sales in its first-quarter financial results, and Duluth said that it saw growth in nearly all of its product categories thanks in part to 20 new stores opening during the quarter. Yet higher spending on advertising, marketing, and pre-opening expenses for those new stores weighed on Duluth's profits, which dropped by almost 90% from year-ago levels. CEO Stephanie Pugliese argued that Duluth's strategic decisions will have greater positive long-term impact despite the short-term hit to earnings, and Duluth repeated its guidance for the full 2017 fiscal year. Yet in a tough retail environment, Duluth will eventually have to show that it can convert its top-line growth into higher profits, and investors didn't seem satisfied with its efforts on that front.

Dan Caplinger has no position in any stocks mentioned. The Motley Fool owns shares of Denbury Resources. The Motley Fool recommends Duluth Holdings. The Motley Fool has a disclosure policy.

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