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Why Bloomin' Brands, Diamond Offshore Drilling, and Bluegreen Vacations Slumped Today

By Dan Caplinger – May 23, 2019 at 4:44PM

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Stock analysts, a failed merger, and a tough industry environment hit these stocks.

The stock market fell sharply on Thursday, with the Dow Jones Industrial Average finishing with a loss of nearly 300 points and other major benchmarks seeing similar-sized drops of 1% to 1.6%. The primary culprit in the eyes of investors was trade, as both of the world's two top economic powers continued to battle over tariffs and trade negotiations. Just about every stock with exposure to imports and exports felt the pinch Thursday, but some companies got hit harder than others. Bloomin' Brands (BLMN -1.30%), Diamond Offshore Drilling (DO), and Bluegreen Vacations (BXG) were among the worst performers. Here's why they did so poorly.

The bloom is off the onion

Shares of Bloomin' Brands fell 10% after the parent company of Outback Steakhouse and other restaurant chains received poor comments from stock analysts at BMO Capital. Bloomin' got downgraded from market perform to underperform, with analysts pointing to the outbreak of African swine fever in China as potentially dragging down earnings, given the possibility that limited supplies of pork and other proteins could push prices sharply higher. Bloomin' has generally held its own in a tough restaurant environment, but the threat of more expensive meat had investors nervous today.

Inside of Outback Steakhouse location, with various promotional materials on windows and walls.

Image source: Bloomin' Brands.

Diamond Offshore deals with oil's decline

Diamond Offshore Drilling's stock dropped nearly 11%, hitting its lowest level in decades on a particularly bad day for the oil market. Crude prices fell to just over $58 per barrel, down 5% and sinking below the key $60 level. Investors fear that trade tensions between the U.S. and China could lead to declining business activity, which in turn would reduce demand for energy products. For Diamond Offshore in particular, the company's emphasis on higher-priced projects puts it particularly at risk when crude falls. Diamond wasn't the hardest-hit energy stock today, but it has a lot to lose if its customers start bailing on new projects because of oil's weakness.

Bluegreen gets left at the altar

Finally, shares of Bluegreen Vacations plunged almost 31%. The timeshare and vacation ownership specialist got rejected by its majority shareholder, BBX Capital (BBX -1.77%), which had previously offered to pay $16 per share to buy the remaining 10% of Bluegreen Vacations that it didn't already own. However, in a terse press release late Wednesday, BBX said that it would not proceed with the merger to take Bluegreen private. Interestingly, the stock now trades below where it did last November prior to the initial BBX offer -- suggesting either that the company has seen its value deteriorate over the past six months or that investors today are overreacting to the news.

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

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Stocks Mentioned

Diamond Offshore Drilling, Inc. Stock Quote
Diamond Offshore Drilling, Inc.
DO
Bloomin' Brands Stock Quote
Bloomin' Brands
BLMN
$18.18 (-1.30%) $0.24
Bluegreen Vacations Corporation Stock Quote
Bluegreen Vacations Corporation
BXG
BBX Capital Corporation Stock Quote
BBX Capital Corporation
BBX
$17.20 (-1.77%) $0.31

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