Shares of Tennant (NYSE:TNC) slipped on Monday, falling 10.7% by the time the market finally closed at 4 p.m. EDT. Driving down the industrial cleaning equipment company's stock was a significant sell-off in the stock market.
Today's market plunge, resulting from the COVID-19 outbreak and a historic sell-off in oil prices, didn't spare too many stocks. While the S&P 500 closed down 7.6% on the day, many stocks finished even lower, including Tennant.
One of the drivers of the decline in the stock market is increasing concerns that the outbreak will cause a global economic recession. If that happens, companies won't make as much money as expected this year, which makes their stock's less valuable.
In Tennant's case, it initially expected that 2020 would be a good year thanks to its strategic accomplishments in 2019. CEO Chris Killingstad stated in the company's fourth-quarter earnings release that "we are looking ahead with a real sense of excitement and anticipation amid the changes we have set in motion with our new enterprise strategy." That optimism led the company to forecast sales growth of 1.5%-2.5% this year, along with adjusted earnings-per-share growth of about 8% at the midpoint of its outlook.
However, a lot has changed since the company issued that guidance on Feb. 20. With the economy potentially heading into a recession over the outbreak, Tennent's results could come in at or below the low end of its outlook.
The market is pricing in the potential for a recession from the impact of the outbreak. However, it's unclear what impact the epidemic will have on the economy and human behavior. Tennant's stock, along with the rest of the market, might still have some more difficult days ahead.