Please ensure Javascript is enabled for purposes of website accessibility
Free Article Join Over 1 Million Premium Members And Get More In-Depth Stock Guidance and Research

Why Domino's Pizza, Innophos Holdings, and W.W. Grainger Slumped Today

By Dan Caplinger - Oct 16, 2018 at 4:31PM

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

Find out what made these companies miss a huge rally.

The stock market soared on Tuesday, climbing on momentum from positive earnings reports and favorable readings on the U.S. job market. Major benchmarks were up roughly 2% to 3%, and many investors took heart in how quickly stock indexes were able to bounce back from the severe drop they saw over a two-day period last week. Yet even with good news helping stocks across the market, there were a few companies that found themselves left out of the rally. Domino's Pizza ( DPZ -0.90% ), Innophos Holdings ( IPHS ), and W.W. Grainger ( GWW 1.73% ) were among the worst performers on the day. Here's why they did so poorly.

Domino's falls down

Shares of Domino's Pizza declined 5% after the company released its third-quarter financial report. The popular pizza chain announced solid growth in retail sales that helped earnings per share soar by more than 65% from the year-ago period. However, investors weren't satisfied with Domino's same-store sales growth numbers, which included gains of just 3.3% internationally and 4.9% at company-owned locations domestically. For a company that's routinely put up double-digit-percentage gains in comparable sales figures, the realization that Domino's period of hyper-growth is coming to an end seemed to chill investor sentiment despite the impressive bottom-line growth that the pizza chain produced.

Interior of Domino's storefront with counter, heat lamps, ovens, and ordering area.

Image source: Domino's Pizza.

Innophos can't satisfy investors' appetites

Innophos Holdings fell nearly 17% in the wake of the issuance of its preliminary third-quarter results and new full-year guidance. The specialty ingredient company said it now expects 2018 growth to come in between 10% and 12%, down from its previous 12% to 14% range due to weaker sales in the second half of the year. Innophos made a strategic decision to discontinue some of its low-margin operations in order to concentrate on more lucrative parts of its business, and that will be responsible for much of the top-line contraction. Higher ingredient costs have affected many food companies, and they've forced Innophos to increase the prices it charges its customers as well. Although Innophos has confidence in its long-term strategic moves, investors aren't happy with the short-term impacts of the decisions it's made recently.

Grainger's in need of repair

Finally, shares of W.W. Grainger finished lower by 12%. The supplier of maintenance, repair, and operating products said that its revenue rose 7% during the third quarter from the previous year's period, with adjusted earnings jumping 44% due to better margin figures and lower taxes. Yet despite the strong performance, investors seem to be uncertain about whether the company's rising sales from large and medium-sized customers will be able to continue indefinitely into the future. As long as Grainger can keep its overall expenses under control without jeopardizing its sales, today's decline seems like an overreaction to concerns that might very well never materialize.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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

Domino's Pizza, Inc. Stock Quote
Domino's Pizza, Inc.
$517.08 (-0.90%) $-4.69
W.W. Grainger, Inc. Stock Quote
W.W. Grainger, Inc.
$499.95 (1.73%) $8.51
Innophos Holdings, Inc. Stock Quote
Innophos Holdings, Inc.

*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 service.

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 12/07/2021.

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

Our Most Popular Articles

Premium Investing Services

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