Major benchmarks declined on Thursday as President Trump criticized the Federal Reserve for its continued interest rate increases, seemingly shunning the White House's traditionally hands-off approach with the U.S. central bank and shifting attention away from a mostly positive start to corporate earnings season.
But several individual stocks pulled back harder than most, including Scholastic (SCHL +0.82%), American Express (AXP +3.08%), and Philip Morris (PM +2.19%). Here's why they did so poorly.
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Scholastic's underwhelming outlook
Shares of Scholastic fell 8.1% after the children's publishing and media specialist announced mixed fiscal fourth-quarter 2018 results and disappointing guidance. Quarterly revenue declined 0.7% year over year to $496.2 million, which translated to 10.7% growth in adjusted (non-GAAP) earnings to $1.45 per share. By comparison, consensus estimates predicted lower earnings of $1.37 per share on higher revenue of $527.2 million.
"We continued to invest in new publishing an productivity-focused technologies under our Scholastic 2020 plan," stated Chairman and CEO Richard Robinson. "A new CRM System now available to book fairs and education is now enabling improved marketing effectiveness and reduced costs."
Robinson added that the new fiscal year should bring further financial improvement even amid continued investments in publishing and technology improvements.
Still, for fiscal 2019, Scholastic expects adjusted earnings per share in the range of $1.60 to $1.70, and revenue in the range of $1.65 billion to $1.70 billion. Even the high ends of those ranges are well below Wall Street's models for fiscal 2019 earnings of $1.89 per share on revenue of $1.73 billion.
American Express' not-so-disappointing quarter
American Express stock dropped 2.7% in the wake of the financial services giant's mixed second-quarter results. Quarterly revenue climbed 9% year over yer to $10.0 billion, short of the $10.05 billion most investors were anticipating. But net income increased 21% to $1.623 billion, or up 25% on a per-share basis to $1.84 -- slightly above consensus estimates for $1.82.
Chairman and CEO Stephen Squeri credited growth to increases in card member spending and fees, as well as higher loan volumes during the quarter.
"We are a globally integrated payments company and the power of our differentiated business model was evident throughout this quarter's results," Squeri added.
American Express also reaffirmed its full-year guidance for earnings to be at the high end of its previously announced range of $6.90 to $7.30 per share.
Contrary to what today's decline indicates, this wasn't a "bad" quarter from American Express. But after combining its slight top-line shortfall with the fact that shares are still up more than 17% over the past year, it seems some investors are content taking profits off the table today.
Philip Morris cuts guidance
Finally, Philip Morris stock initially fell as much as 6.9% early in the session, then recovered to close down 1.5%, after the American cigarette and tobacco juggernaut announced solid second-quarter results, but reduced its financial outlook.
Quarterly revenue grew 11.7% year over year (8.3% at constant currencies) to $7.726 billion, while adjusted earnings per share increased 23.7% to $1.41. Analysts, on average, were looking for lower earnings of $1.23 per share on revenue of $7.53 billion.
For the full-year 2018, however, Philip Morris now expects earnings per share in the range of $5.02 to $5.12, compared to its prior guidance for $5.15 to $5.30. Largely to blame is weakness from the company's "reduced risk" products, including its iQOS heat-not-burn tobacco technology, for which Philip Morris is implementing "rightsizing" and marketing initiatives given significant underperformance in Japan.
