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Why Barnes & Noble Education, MSC Industrial Direct, and Insys Therapeutics Slumped Today

By Dan Caplinger - Jul 12, 2017 at 4:54PM

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Despite a higher market, these stocks fell. Find out why.

Wednesday was a good day on Wall Street, as market participants reacted favorably to congressional testimony from Fed chair Janet Yellen. The central banker told House representatives that the economy has the strength to handle the interest rate increases that the Fed has already made, but she also signaled that future hikes might be fewer and further between than investors were anticipating. The Dow finished the day with a gain of 123 points, and the S&P 500 and Nasdaq were up 0.73% and 1.1%, respectively. Yet some stocks missed out on the rally, and Barnes & Noble Education (BNED 4.25%), MSC Industrial Direct (MSM 0.30%), and Insys Therapeutics (INSY) 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.

Barnes & Noble Education flunks out

Shares of Barnes & Noble Education dropped more than 11% after the company reported its fiscal fourth-quarter financial results. The operator of higher-education bookstores said that revenue for the quarter was up 16% from the year-ago period on a 1.4% rise in comparable-store sales, and B&N Education posted a small GAAP profit in reversing a more substantial loss in the fiscal fourth quarter of 2016. Yet the company chose not to provide earnings guidance for the new 2018 fiscal year, and it said that it expects flat sales and falling comparable-store sales in the coming year by low- to mid-single-digit percentages. Given the difficulties that B&N Education has faced recently, even a relatively solid report wasn't enough to reassure investors that the worst is over for the college bookstore specialist.

B&N Education checkout.

Image source: Barnes & Noble Education.

MSC Industrial takes a hit

MSC Industrial Direct stock plunged 14% due to poor guidance in the company's fiscal third-quarter financial report. The industrial distributor reported modest growth for the quarter, including sales gains of 2% and a rise in earnings per share of almost 4% from year-ago levels. CEO Erik Gershwind said that "the environment improved through the quarter as the manufacturing economy continued to firm," and that helped contribute to rising sales across all of its customer types. However, sales guidance for between $732 million and $746 million for the fiscal fourth quarter suggested the possibility of revenue declines year over year, and earnings projections of $0.97 to $1.01 per share weren't enough to satisfy investors looking for the consensus estimate of $1.06 per share. MSC will have to keep improving along with the manufacturing economy if it wants to restore confidence among its shareholders.

Insys deals with controversy

Finally, shares of Insys Therapeutics fell almost 8.5%. Two previous employees of the drug company pleaded guilty to charges that they offered bribes to doctors in order to induce them to prescribe an opioid medication produced by Insys. Late last year, the U.S. Department of Justice arrested several pharmaceutical executives and managers connected to the case, including former CEO Michael Babich. The company itself has said that it is working on a settlement with the DOJ to put to rest any concerns about corporate liability, but negative publicity from the events could well weigh on Insys even as it moves forward with cannabinoid-based medications to supplement or replace its opioid products.

Dan Caplinger has no position in any stocks mentioned. The Motley Fool owns shares of and recommends MSC Industrial Direct. The Motley Fool has a disclosure policy.

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Stocks Mentioned

MSC Industrial Direct Co., Inc. Stock Quote
MSC Industrial Direct Co., Inc.
$82.32 (0.30%) $0.25
INSYS Therapeutics Stock Quote
INSYS Therapeutics
Barnes & Noble Education, Inc. Stock Quote
Barnes & Noble Education, Inc.
$2.70 (4.25%) $0.11

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