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Why Chesapeake Energy, TravelCenters of America, and Conn's Slumped Today

By Dan Caplinger - Mar 14, 2016 at 7:06PM

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Even though the market was flat, these stocks dropped. Find out why.


Image: Chesapeake Energy.

Monday was a relatively quiet day for the stock market, which was little changed after celebrating several weeks of solid gains. Investors continue to look for long-term direction from the macroeconomic situation, and the coming meeting of the Federal Reserve this week could hold some clues to the future direction of the U.S. economy and its impact on the rest of the world. Even though the broader market benchmarks showed the impact of that waiting game, several stocks suffered from bad news that sent their shares sharply lower. Among them were Chesapeake Energy (CHKA.Q), TravelCenters of America (TA 0.71%), and Conn's (CONN 1.16%).

Chesapeake Energy fell 7% on the day, largely in response to a decline in the energy markets. Crude oil prices fell more than $1 per barrel to close just above the $37 level, and natural gas also closed slightly lower at $1.82 per million BTUs. Most of the attention that the stock got today stemmed from incoming details on the car crash that killed founder and former CEO Aubrey McClendon, which included the fact that the SUV was going nearly 80 miles per hour when it crashed into a concrete bridge. Chesapeake shares have performed well during oil's recent bounce, but the stock has still posted huge long-term losses that many investors are skeptical the energy company will ever be able to recoup fully.

TravelCenters of America was down 19% after reporting its fourth-quarter financials Monday morning. The truck-stop operator said that revenue for the quarter was down 22% from year-ago figures, reflecting the much-lower price of gasoline during the final quarter of 2015 compared to the year-earlier results. However, TravelCenters of America also wasn't able to push fuel savings into profits, and the company actually lost $0.04 per share because of plunging gross margins on fuel. Recent acquisitions of convenience stores and other locations has helped to grow out the TravelCenters network, but investors worry that if the U.S. economy starts to slow, it could put a lid on commercial demand for diesel fuel. Much of TravelCenters' future will depend on whether drivers hit the road running during this summer's high season.

Finally, Conn's finished Monday off 8%. The decline seemed related to ongoing selling pressure following the retailer's February sales data release last week, which showed same-store sales growth of just 2.7% even though the month included an extra day from the quadrennial leap year. This morning, Conn's said that it would securitize more than $700 million in receivables related to its installment contracts, and the retailer expects to offer different classes of asset-backed securities in private placements with a total principal amount of roughly $564 million. The structure of the offering includes different tranches that correspond to various risk levels, but the bigger question facing Conn's is whether current investors will be pleased with the company's methods of raising capital. Given the challenges that Conn's has seen lately, the last thing it needs is more bad news to keep its shares under pressure.

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Stocks Mentioned

Chesapeake Energy Corporation Stock Quote
Chesapeake Energy Corporation
CHKA.Q
Conn's, Inc. Stock Quote
Conn's, Inc.
CONN
$12.18 (1.16%) $0.14
TravelCenters of America Inc. Stock Quote
TravelCenters of America Inc.
TA
$34.06 (0.71%) $0.24

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