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 Textron, Nu Skin Enterprises, and Ericsson Slumped Today

By Dan Caplinger - Jul 17, 2019 at 4:33PM

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

These stocks helped contribute to the broader market's losses.

The stock market pulled back from its recent record-setting rally on Wednesday as investors started to consider some of the more troubling possibilities for the remainder of 2019. Many market participants have assumed that outstanding issues like trade disputes and other geopolitical tensions would get resolved in short order, but the possibility of ongoing turmoil could eventually start showing up in economic growth figures and earnings results. In addition, some bad news from individual companies hurt the overall mood on Wall Street. Textron ( TXT -2.33% ), Nu Skin Enterprises ( NUS -1.73% ), and Ericsson ( ERIC 0.20% ) were among the worst performers. Here's why they did so poorly.

Textron hits turbulence

Shares of Textron fell 9.5% after the aircraft manufacturer and industrial conglomerate reported its second-quarter financial results. Textron said that both revenue and net income were down from year-ago levels, and it took significant stock buybacks to keep earnings per share moving higher. Weakness in commercial turboprop deliveries, helicopter production, and unmanned systems dinged the company's top line, and the sale of its tools and test division hurt its industrial segment revenue. CEO Scott Donnelly said he expects a recovery in the second half of 2019, but investors didn't seem to want to wait longer for a rebound.

Cessna Sovereign jet in flight over a lake.

Image source: Textron.

Nu Skin warns of blemishes ahead

Nu Skin Enterprises saw its stock plunge nearly 15% following its release of estimated second-quarter results. The skin care products specialist said that weak performance in the Chinese market would result in revenue of between $622 million and $623 million in the second quarter, less than what most investors were expecting to see, and earnings will likely come in between $0.82 and $0.84 per share. Analysts at D.A. Davidson then downgraded the stock from buy to neutral, with their concerns about the possible long-term impact of China's weakness making shareholders more nervous. The news came as a shock, particularly given Nu Skin's strong results from the first quarter.

Ericsson drops the call

Finally, shares of Ericsson declined 11%. The telecom infrastructure company's second-quarter results looked good on their face, featuring double-digit percentage sales growth and reversing a year-ago loss with a substantial profit. Yet Ericsson also had some things to say about the Asian economy, noting that its planned rollout of 5G networks in the region would likely put downward pressure on the company's bottom line. Ericsson faces considerable competition in supplying components for Asian 5G networks, and even though the company has done a good job of turning itself around, it has to push even harder in order to achieve the goals that its investors have set for the telecom player.

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

Textron Inc. Stock Quote
Textron Inc.
$69.15 (-2.33%) $-1.65
Telefonaktiebolaget LM Ericsson (publ) Stock Quote
Telefonaktiebolaget LM Ericsson (publ)
$10.02 (0.20%) $0.02
Nu Skin Enterprises, Inc. Stock Quote
Nu Skin Enterprises, Inc.
$43.12 (-1.73%) $0.76

*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 12/02/2021.

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

Premium Investing Services

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