Wall Street has been riding high on record performance for major market benchmarks, extending the eight-year-old bull market in 2017. Not every stock has participated in the overall rally, however, and between industry-related pressures and company-specific issues, some companies have seen dramatic losses. Whiting Petroleum (WLL), Tailored Brands (TLRD), and Synchronoss Technologies (SNCR 3.80%) have lost more than 50% so far in 2017, and hard-hit investors want guidance on whether further losses are likely -- or whether a rebound is possible.
Whiting follows oil lower
Crude oil prices have returned to their downward trend in 2017, and Whiting Petroleum has been just one of the many hard-hit energy stocks in the industry so far this year. Lower oil hurts Whiting in several ways, both by reducing the cash flow that it gets from its drilling operations and by making it more difficult for the exploration and production company to get good terms on financing for existing and future projects.
There's reason for investors to be bullish on Whiting's prospects. The company's first-quarter results included better production numbers than expected, and dramatic cost reductions have helped the company cut its losses even in a tough price environment. New techniques that allow Whiting to put multiple wells on drilling pads and to boost use of fracking sand and diverter agents have resulted in rising production estimates. Lower water-disposal costs and reduced discounts for Bakken production due to the rise of infrastructure in the region have also helped Whiting's bottom line. Yet until oil rebounds, it will be tough for Whiting shareholders to see all the benefits of the company's smart strategic moves.
Tailored Brands can't find the right fit
Tailored Brands is a leading retailer of men's clothing, with store brands like Men's Wearhouse and Jos. A. Bank offering suits, dress shirts, and other business clothing to shoppers. Retail in general has gone through tough times lately, but Tailored Brands has seen more than its fair share of pain.
Most of Tailored Brands' 2017 decline came after the retailer announced fourth-quarter results back in March. Revenue fell 4% from year-earlier levels, and comparable sales at Men's Wearhouse fell 2.2%. Even though the Jos. A. Bank concept enjoyed a 3.6% gain in comps, Tailored Brands' loss for the quarter was worse than investors had hoped. The retailer also expects its bottom line to deteriorate in 2017 on falling comps. With key partnerships such as a tuxedo rental service at department store giant Macy's (M 0.39%) having proven unsuccessful, Tailored Brands will have to work harder to find ways to grow if it wants to get its stock out of its tailspin.
Synchronoss accepts its fate
Synchronoss Technologies holds the dubious distinction of having some investors actually feeling good about its recent stock performance. Even though the shares are down almost 60% year to date, they've rebounded from even worse declines from earlier in the year.
Synchronoss hit a low point after announcing preliminary first-quarter results in late April. The company cut its revenue and operating margin guidance, and its CEO and CFO stepped down from their positions, leaving founder Stephen Waldis to take on the CEO position. From there, Synchronoss got the news that it would have to restate its financial statements for 2015 and 2016, following an audit committee investigation into past accounting.
What caused the stock to rebound somewhat was an acquisition bid from private equity investors at Siris Capital. The terms of the deal included $18 per share in cash for Synchronoss investors, sending the stock up 35% in a single day. Yet if the deal goes through, investors will have locked in a loss of more than half for the year -- not something that most shareholders will be all that happy about.
Before you look at poor performers as potential bargains, it's important to understand why they dropped. Whiting has the potential to bounce back if oil prices climb, but Tailored Brands will need more internal work to improve, and Synchronoss' losses might become permanent in the near future.