Please ensure Javascript is enabled for purposes of website accessibility

Why Delta Air Lines, United Natural Foods, and Acuity Brands Slumped Today

By Dan Caplinger - Oct 2, 2019 at 4:34PM

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

Special circumstances led these stocks to much larger losses than the overall market.

The fourth quarter hasn't started out well for the stock market, and Wednesday's declines for major benchmarks were even more severe than Tuesday's. Investors increasingly fear that the U.S. economy is moving toward a recession, and they're concerned that many high-flying stocks will lose their support if overall market momentum shifts downward. In addition, some well-known companies faced significant challenges that created even larger losses in their share prices. Delta Air Lines (DAL -2.26%), United Natural Foods (UNFI -2.05%), and Acuity Brands (AYI 0.02%) were among the worst performers. Here's why they did so poorly.

Delta gets dragged lower

Shares of Delta Air Lines fell nearly 5% after the airline giant warned that its third-quarter sales might not have grown at as quick a pace as previously hoped. Delta predicted that adjusted revenue will come in about 6.5% higher in the third quarter than in the year-ago period. Investors had expected a growth rate closer to 7%, and even though Delta's estimate of earnings between $2.20 and $2.30 per share was slightly more favorable than previously anticipated, shareholders nevertheless expressed their concern. Fundamentally, though, the company saw healthy traffic levels and load factors during September, and anything short of a full-blown recession might well leave the airline looking surprisingly strong in investors' eyes.

Aircraft with Delta markings against a blue sky with thin clouds.

Image source: Delta Air Lines.

United Natural spoils

United Natural Foods saw its stock plunge 26% following the food distributor's fiscal fourth-quarter financial report. The company said that adjusted net sales were up 3% from year-ago levels after taking out the impact of last year's SUPERVALU acquisition, but earnings declined sharply year over year. CEO Steven Spinner tried to concentrate on the long run, pointing to the transformational nature of the past year. Yet calls for adjusted earnings of just $1.22 to $1.76 per share in fiscal 2020 compared unfavorably against fiscal 2019's $2.08-per-share figure, signaling that tough conditions will prevent United Natural from growing its bottom line well into the future.

Acuity sees sales slump

Finally, shares of Acuity Brands dropped 11%. The lighting and building management solutions company saw fiscal fourth-quarter sales fall almost 12% from year-ago levels, with unit volumes slumping 16% year over year. CEO Vernon Nagel blamed "sluggish market conditions" for holding Acuity back, but he was still pleased that the company managed to control costs and keep margin levels healthy. Price increases were able to offset higher tariffs to some extent. Shareholders, however, believe that if recessionary forces hit the broader economy, Acuity could see an outsize impact, and that contributed to the steep decline in the stock.

Dan Caplinger has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Delta Air Lines. The Motley Fool has a disclosure policy.

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

Acuity Brands, Inc. Stock Quote
Acuity Brands, Inc.
AYI
$185.86 (0.02%) $0.04
Delta Air Lines, Inc. Stock Quote
Delta Air Lines, Inc.
DAL
$34.54 (-2.26%) $0.80
United Natural Foods, Inc. Stock Quote
United Natural Foods, Inc.
UNFI
$46.41 (-2.05%) $0.97

*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 analyst team.

Stock Advisor Returns
402%
 
S&P 500 Returns
129%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/18/2022.

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.