Please ensure Javascript is enabled for purposes of website accessibility

Why AMC Entertainment Holdings, StoneMor Partners, and XPO Logistics Slumped Today

By Dan Caplinger - Jul 17, 2017 at 4:30PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Even though the market largely held its ground today, these stocks fell. Find out why.

Monday was a quiet start to the week on Wall Street, as major benchmarks eased downward from Friday's close. The S&P 500 and Dow Jones Industrials traded on either side of the unchanged line, flirting with making further advances into record territory. Yet even though a strong economic report from China gave international investors further optimism, gains evaporated in the U.S. as oil prices slipped and investors waited to see how the opening days of the new earnings season would go. Bad news from some companies also had a negative impact on investor sentiment, and AMC Entertainment Holdings (AMC -4.88%), StoneMor Partners (STON), and XPO Logistics (XPO -4.73%) 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.

Will the lights go out on AMC?

Shares of AMC Entertainment Holdings dropped 10% in the wake of negative comments over the weekend from journalists covering the movie theater operator. Barron's released a report noting that AMC and its peers in the theater business have missed out on the bull market in 2017, suffering substantial losses because of rising competition from at-home entertainment options and a lack of original, inspired content from Hollywood. Particularly disturbing is the idea that movie studios might choose to bypass theaters entirely, offering pay-per-view-like options to allow home viewers to pay ultra-premium prices to watch movies at home within days of their initial release. Given all the capital improvements that AMC and its peers have made to modernize theaters and make them more attractive as destinations, that threat could jeopardize their return on substantial investments, and shareholders seemed uncertain how the theater industry will respond.

AMC theater location.

Image source: AMC Entertainment Holdings.

StoneMor suffers a technical debt default

StoneMor Partners stock declined 10% after the cemetery and funeral home operator gave investors an update on its efforts to restate its financial results. The company said that it still hasn't finished its accounting review, and because it hasn't been able to file its annual report with the U.S. Securities and Exchange Commission pending completion of the review, StoneMor is now in technical default on its revolving credit agreement. The death-care company also foresees that further default events will occur in mid-August, as it believes it's unlikely to be able to file its first-quarter or second-quarter reports quickly enough to meet required deadlines on that front. StoneMor hopes that it will be able to get extensions of time or other waivers with lenders, but the news was still disquieting to investors, who are already gun-shy about the company following its decision last October to slash its dividend.

XPO falls on preliminary results

Finally, shares of XPO Logistics fell 5%. The transportation and logistics specialist released its preliminary second-quarter results, which included total revenue projections of between $3.755 billion and $3.765 billion and operating income of $183 million to $187 million. XPO sees its organic revenue growth coming in between 7% and 7.9%, and cash flow from operations should be between $205 million and $215 million. In addition, XPO said that it would make a secondary offering of its stock, selling 11 million shares to raise capital for general corporate purposes. The company mentioned the possibility of refinancing or paying down debt as well as making strategic acquisitions as possible uses for the funds. Even with today's declines, favorable trends in e-commerce have helped send XPO stock up about 40% so far in 2017.

Dan Caplinger has no position in any stocks mentioned. The Motley Fool recommends XPO Logistics. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

StoneMor Partners L.P. Stock Quote
StoneMor Partners L.P.
XPO Logistics, Inc. Stock Quote
XPO Logistics, Inc.
$55.14 (-4.73%) $-2.74
AMC Entertainment Holdings, Inc. Stock Quote
AMC Entertainment Holdings, Inc.
$22.79 (-4.88%) $-1.17

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/09/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.