UPDATE: The Qihoo 360 entry has been corrected to eliminate any mention of reported earnings. QIHU does not report earnings until March 4. We apologize for the error.
The Federal Reserve revealed today (via the minutes from its January meeting) that it’s in no particular hurry to increase interest rates, and likely won’t be until the Fed’s governors see more inflationary pressure as well as a little less slack in the employment market. It was enough to broadly unwind the day’s loss, mostly, leading the S&P 500 to break even on the day.
Breaking even would have been a small victory for the likes of Genworth Financial Inc. (NYSE:GNW), Fossil Group Inc. (NASDAQ:FOSL) and Qihoo 360 Technology Co. Ltd (NYSE:QIHU) today though. These three names were the worst of the worst on Wednesday. Here’s why.
Fossil Group (FOSL)
The good news: Fossil Group managed to beef up its year-over-year profits in a very tough fourth quarter for most retailers and apparel/accessory companies. The bad news: Those results still weren’t good enough.
The really bad news: Fossil Group sees turbulence ahead.
All told, watch and accessory maker Fossil Group posted a profit of $3.00 per share of FOSL stock last quarter, on $1.06 billion in sales. The bottom line was up 12% from the year-ago total of $2.68 on about the same revenue figure. However, analysts were collectively expecting a profit of $3.10 per share of FOSL stock on $1.12 billion in sales.
Fossil Group fanned the bearish flames by admitting that it only expected to turn a profit of somewhere between 59 cents and 69 cents per share in the current quarter, versus analyst estimates for a profit of $1.25 per share of FOSL stock.
When all was said and done, FOSL stock closed 16% lower on Wednesday.
Qihoo 360 Technology (QIHU)
An analyst downgrade took a toll on QIHU stock Wednesday, in the form of an 8.5% drop.
It was Jefferies that did the deed, newly deeming Qihoo 360 Technology a “hold” versus its previous rating of “buy”. The research firm also lowered its price target in QIHU stock to $67 per share.
The core of the analyst’s concern was tepidness in the online gaming market.
Genworth Financial (GNW)
Last but not least, mortgage insurer Genworth Financial shares took a 9% dive today on the heels of news that its Australian arm had lost a key contract with banker/lender Westpac.
In simplest terms, after crunching the numbers, Westpac Banking Corp. (Australia’s second-bigger lender) decided it no longer needed Genworth’s mortgage insurance services … a move likely related to regulatory pressure on that country’s banks to dial back on riskier, small-down-payment loans. Westpac only made up about 14% of Genworth Financial’s business in Australia, and obviously even less of its global business. But, investors are understandably concerned that this may be the first of several such ends to current deals.
Although Genworth Financial didn’t say exactly how hard the Westpac decision may have on profits per share of GNW stock, the company did acknowledge it would be evident beginning with 2016’s results.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.
