Image: Movado Group.
Thursday brought a calm end to a volatile first quarter of 2016, and the Dow and S&P 500 both finished with losses of about 0.2% even as the Nasdaq Composite finished the day roughly flat. Oil prices inched lower, and the U.S. dollar continued to lose ground against the euro and other major foreign currencies. That brought some hope that the coming earnings season might be stronger than we've seen in past quarters, especially for those companies who do a substantial amount of business abroad. Nevertheless, some stocks posted much larger losses than the overall market, and among them were Movado Group (MOV +0.23%), Lindsay (LNN 1.48%), and Silver Wheaton (SLW +2.70%).
Movado Group fell 9% after the watch and accessories maker reported its fiscal fourth-quarter earnings Thursday morning. Revenue growth of 7% for the quarter was better than investors had expected, and adjusted earnings per share of $0.40 topped the consensus forecast by a penny per share. However, guidance for between $585 million and $600 million in revenue for fiscal 2017 was less ambitious than investors had wanted to see, and earnings of $1.85 to $2 per share didn't live up to the $2.27 per share expectations among those following the stock. Given the pressures that Movado has faced from general sluggishness in the high-end retail market and specific competitive challenges from smartwatches and other wearable technology, even the news of a $50 million stock buyback and an 18% increase in the company's dividend wasn't enough to keep the stock from moving lower.
Lindsay also dropped 9% in the wake of its fiscal second-quarter report. The provider of irrigation systems and infrastructure products said that its revenue fell almost 15% to $120.6 million compared to the year-earlier quarter, with particular weakness stemming from the completion of its Golden Gate Bridge road-zipper project that nearly cut infrastructure-related revenue in half. A GAAP net loss of $0.37 per share reflected a $0.79-per-share charge because of environmental expenses, but even adjusting for that item, Lindsay fell short of the $0.56 per share consensus forecast among investors. CEO Rick Parod was cautious about the near-term future, saying that "while we have seen signs of stabilization, the [irrigation] market continues to reflect reductions from peak periods in farmers' investments in equipment due to the lowest projected net farm income since 2002." Until conditions turn in the agriculture area, Lindsay could face difficulties executing a turnaround.
Finally, Silver Wheaton declined 6%. The silver-streaming company said that it had increased the size of its public offering of shares to $550 million, pricing 33.135 million shares at $16.60 per share. Silver Wheaton intends to use the proceeds to pay down a portion of its debt under its revolving credit facility, and that could potentially free up more liquidity for future streaming deals with gold and silver mining companies. With the stock having risen by more than 50% since mid-January, now isn't a terrible time to raise capital by selling stock. Yet some investors will be disappointed with the move given its potential dilutive impact if precious metals prices continue to rise.
