Thursday was a good day on Wall Street, with the broad-based S&P 500 climbing out of an early hole to gain about half a percent on the day. Concerns about the ongoing escalation of trade disputes evaporated in light of strong performance from the technology sector, which sent the Nasdaq Composite up sharply. Even with the broader gains, some stocks missed out on the market's optimism. Wynn Resorts (NASDAQ:WYNN), Red Robin Gourmet Burgers (NASDAQ:RRGB), and Teva Pharmaceutical Industries (NYSE:TEVA) were among the worst performers. Here's why they did so poorly.
Wynn loses in Macau
Shares of Wynn Resorts fell almost 7% after the casino resort giant reported its second-quarter earnings results. Most investors were concerned primarily about Wynn's poor showing in the key Asian gaming capital of Macau, which included a 15% drop in revenue from the older Wynn Macau resort. The newer Wynn Palace saw huge gains, but some analysts believe that excitement about the newer property could be taking sales away from the older one. Given the generally downbeat performance that other casino companies have posted for the period, Wynn's results aren't surprising, but they were a disappointment to those who'd hoped that it would be able to escape the big hits that some of its competitors have suffered recently.
Red Robin gets scorched
Red Robin Gourmet Burgers stock plunged 19% in the wake of the release of the company's preliminary second-quarter results. The burger chain warned that asset impairment charges would push it to a net loss for the quarter on a GAAP basis, and comparable-restaurant sales declines of 2.6% resulted from a drop in traffic as well as lower per-customer revenue generation. Even after accounting for extraordinary items, Red Robin's results "are significantly lower than expected," in the words of CEO Denny Marie Post. The introduction of a lower price-point for part of Red Robin's menu is largely responsible for the declines, but the burger chain sees it as a necessary element of its strategy to remain affordable and provide value for its customers.
Teva worries over generic competition
Finally, shares of Teva Pharmaceutical Industries finished down 9.5%. The drug maker said that sales of generic drugs in North America were down almost 30% compared to the previous year's period, and proprietary multiple sclerosis treatment Copaxone suffered an even bigger drop in revenue. Even though Teva boosted its full-year earnings guidance, analysts were more pessimistic about the company's prospects, pointing to continued pressure on pricing and rising competition as headwinds that will hold Teva back. Some believe that Teva should join the trend toward consolidation and look for more strategic combinations, but for now, shareholders just aren't satisfied with how the company has behaved lately.
Dan Caplinger owns shares of Wynn Resorts. The Motley Fool owns shares of Red Robin Gourmet Burgers and has the following options: short September 2018 $50 calls on Red Robin Gourmet Burgers. The Motley Fool has a disclosure policy.