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Why Chesapeake Energy, Diebold Nixdorf, and AutoZone Slumped Today

By Dan Caplinger - Updated Jul 5, 2017 at 5:05PM

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Despite decent performance from the market, these stocks fell. Find out why.

The stock market finished narrowly mixed on Wednesday, with the Dow losing a single point even as the S&P 500 and Nasdaq Composite gained ground. Minutes from the Federal Reserve indicated that the central bank still intends to reduce the size of its balance sheet, marking another pullback from the extreme measures that it took in the aftermath of the financial crisis. Yet most investors seemed to continue looking for pockets of strength in the market, and disparate performance across sectors was once again evident.

Several individual stocks suffered from concerns about their future prospects, and Chesapeake Energy (CHKA.Q), Diebold Nixdorf (DBD -4.07%), and AutoZone (AZO 0.52%) 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.

Chesapeake deals with weakness in oil

Shares of Chesapeake Energy dropped 7% on a terrible day for the energy markets. After having seen some modest gains in recent sessions, the price of crude plunged $2 per barrel, taking it back down to the $45-per-barrel mark and throwing cold water on investor enthusiasm for the sector. Chesapeake is particularly sensitive to price movements in the crude oil market because of the level of leverage it has on its balance sheet, and the company's reliance on shale plays also puts Chesapeake in a position in which higher prices have more of a positive impact than they do on other players in the energy industry. Falling prices will only hurt already struggling cash flow, and that could pose long-term issues for Chesapeake if energy markets don't rebound quickly.

Oil wells.

Image source: Getty Images.

Diebold cuts its guidance

Diebold Nixdorf stock plunged 23% after the company adjusted its 2017 financial outlook downward. The financial transaction services specialist said that it now expects sales of just $4.7 billion to $4.8 billion, down $300 million from its previous prediction. Adjusted earnings will be between $0.95 and $1.15 per share, down $0.45 to $0.55 per share from its most recent guidance. Delays in rolling out new systems and the timing and volume of expected orders for complex banking software projects were primarily responsible for the downward revisions. CEO Andy Mattes said that he's still pleased about "the positive feedback we are receiving from customers" regarding its business, but Diebold will still have to find ways to get moving in the right direction again if it wants to keep investors satisfied.

AutoZone falls in parts rout

Finally, shares of AutoZone fell 10%. The auto-parts specialist saw its stock decline in sympathy with O'Reilly Automotive, which dropped almost twice as much as AutoZone did after predicting that its second-quarter same-store sales were up just 1.7% from year-ago levels. That was well below the company's initial prediction of 3% to 5% growth in comps, and AutoZone investors took that as a sign that the entire industry could be facing unexpected headwinds. AutoZone has also disappointed investors in recent quarters, and today's news suggested that initial hopes that temporary factors might give way to better performance in the second quarter might well turn out to be completely unfounded. AutoZone will have a chance to prove that theory wrong when it makes its next earnings report, but those results aren't expected for another couple of months.

Dan Caplinger has no position in any stocks mentioned. The Motley Fool owns shares of ORLY and has the following options: short August 2017 $250 calls on ORLY and long August 2017 $220 puts on ORLY. The Motley Fool recommends AutoZone. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Chesapeake Energy Corporation Stock Quote
Chesapeake Energy Corporation
CHKA.Q
Diebold Nixdorf, Incorporated Stock Quote
Diebold Nixdorf, Incorporated
DBD
$3.54 (-4.07%) $0.15
AutoZone, Inc. Stock Quote
AutoZone, Inc.
AZO
$2,332.09 (0.52%) $12.00

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