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Why Duluth Holdings, Argan, and LendingClub Slumped Today

By Dan Caplinger – Dec 7, 2017 at 4:30PM

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Find out what sent these stocks lower on a good day for the market.

Wall Street had a good session on Thursday, as the Dow Jones Industrials and other major benchmarks all managed to see gains of as much as half a percent. Overall comfort with the status of the U.S. economy helped make most investors optimistic about the prospects for stocks, and continued froth in the bitcoin market made the gains that stocks have posted in recent years look modest by comparison. Still, some companies suffered bad news that sent their shares lower, and Duluth Holdings (DLTH -2.34%), Argan (AGX 1.69%), and LendingClub (LC 0.49%) 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.

Duluth's growth can't satisfy investors

Shares of Duluth Holdings dropped 17% after the company released its third-quarter financial results. The workwear and accessories retailer said that revenue for the quarter climbed 25%. Yet rising costs associated in part with the expansion of the company's retail store base led to higher overall operating expenses and contributed to a net loss for the quarter. The transformation in Duluth's business has been impressive, with retail store revenue doubling from year-ago levels and making the company much more balanced between direct-to-consumer and brick-and-mortar operations. Yet investors want to see greater profits, and until Duluth provides them, the stock could remain under pressure.

Person in a flannel shirt with a chainsaw cutting a log in front of a Duluth Trading store, with a modest audience of onlookers.

Image source: Duluth Holdings.

Argan sees earnings fall

Argan stock plunged 23% in the wake of the company's third-quarter financial report. Revenue for the power industry engineering and construction specialist climbed by a third from year-earlier figures, buoyed by four large natural gas-fired power plant projects. Yet profit fell by 5% compared to the third quarter of 2016, and CEO Rainer Bosselmann admitted that although "we are proud of this growth and these results and are pleased to have added some great projects in the U.K. to our backlog, we know we need to add many more." The power services business has been a solid industry lately, and Argan is poised to keep taking advantage of improving conditions.

LendingClub lowers expectations

Finally, shares of LendingClub declined 15.5%. The online loan specialist cut its guidance for the full 2017 year in a presentation to investors, reducing sales estimates by about half a percent and projecting a roughly 4% to 5% wider net loss than previously expected. LendingClub's guidance for 2018 implies solid sales growth, but it doesn't anticipate becoming profitable next year. The balancing act that LendingClub must make involves finding ways to grow without letting its credit exposure rise to unacceptably high levels. That will get increasingly challenging as the lender matures.

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

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Stocks Mentioned

LendingClub Stock Quote
$10.31 (0.49%) $0.05
Duluth Holdings Stock Quote
Duluth Holdings
$8.76 (-2.34%) $0.21
Argan Stock Quote
$37.95 (1.69%) $0.63

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