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Why Shake Shack, Cloud Peak Energy, and VF Corp. Slumped Today

By Dan Caplinger - Feb 16, 2018 at 4:35PM

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Even though the market gained ground, these stocks sank. Find out why.

Friday was a generally flat day on Wall Street, with the Dow finishing up just 19 points and other major benchmarks ending mixed. Earnings season got its second wind toward the end of the week, and cross-currents also came in news from Washington about the indictment of more than a dozen Russian nationals accused of tampering with the U.S. elections in 2016. Overall optimism about the economy helped lift stocks broadly, but some companies had bad news that kept their shares under pressure. Shake Shack (SHAK -2.76%), Cloud Peak Energy (CLD), and VF Corp. (VFC 6.08%) were among the worst performers on the day. Here's why they did so poorly.

Shake Shack gets shaken up

Shares of Shake Shack dropped 8% after the burger chain reported its fourth-quarter financial results late Thursday. Shake Shack said that sales for the quarter climbed 31% from year-earlier figures, capping a year in which 2017 revenue was higher by nearly 34% from 2016 levels. Yet comparable-restaurant sales rose only 0.8% for the quarter and were down 1.2% for the full year. Shake Shack has thus far been able to overcome sluggish comps by opening more stores, and this quarter was no different, as the burger chain brought 16 new restaurants on line during the period. Yet those who'd hoped that Shake Shack could manage faster growth without relying so much on store openings will have to be patient for at least another quarter.

About two dozen people outside a Shake Shack location.

Image source: Shake Shack.

Cloud Peak loses energy

Cloud Peak Energy stock plunged 22% after the coal company issued its fourth-quarter report. The Wyoming-based producer said that coal shipment volumes, realized prices per ton, and net income all fell sharply while average costs per ton of coal sold were markedly higher from year-earlier figures. Company executives are hopeful that supply and demand dynamics in the coal market will improve in 2018, with expectations that exports will bounce back from 4.2 million tons in 2017 to 5.5 million tons in 2018. Yet with such extensive declines, investors remain nervous about the fate of coal both in the U.S. and abroad.

VF Corp. wipes out

Finally, shares of VF Corp. declined 11%. The company behind the Vans and North Face brands reported fourth-quarter results that included a 20% rise in sales, but more than half of that came from the recent acquisition of Williamson-Dickie. A 13% rise in adjusted earnings per share didn't satisfy many investors, and of some concern was the fact that VF saw adjusted operating margin fall by more than a full percentage point to 13%. A weak dollar is likely to help VF's earnings during the current quarter, but shareholders seemed focused on the company's challenges coming after a good year for the stock in 2017.

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Stocks Mentioned

V.F. Corporation Stock Quote
V.F. Corporation
VFC
$47.32 (6.08%) $2.71
Cloud Peak Energy Inc. Stock Quote
Cloud Peak Energy Inc.
CLD
Shake Shack Inc. Stock Quote
Shake Shack Inc.
SHAK
$41.98 (-2.76%) $-1.19

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

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