The wind in the market’s sails on Thursday was nowhere to be found on Friday, as investors put the good news of economic stimulus in Europe behind them, perhaps doubting that it will do any good. Stocks closed 0.55% red today, though still well up for the week.
Some stocks, however, were hit much harder than others. Avon Products, Inc. (AVP), United Parcel Service, Inc. (UPS) and United States Steel Corporation (X), for instance, were absolutely crushed. Here’s the deal.
Avon Products (AVP)
Thursday may have been the first glimmer of hope for Avon Products in months, with AVP stock rising 14% in the wake of rumors it was a buyout target.
The buyers weren’t nearly as confident on Friday, however, letting AVP stock slide nearly 8%. The potential buyer is reported to be private-equity firm TPG Capital.
If it all seems a little familiar for Avon Products, that may be because cosmetics maker Coty (COTY) offered to buy Avon in 2012, for more than $10 billion. The company opted to hand the keys over to CEO Sheri McCoy, though, confident she could turn things around. She hasn’t. Now Avon Products is only valued at $3.7 billion, with sales and earnings continuing to deteriorate.
United Parcel Service (UPS)
United Parcel Service may have been as busy during 2014’s holiday shopping — and shipping — season as it first thought it would be, but it wasn’t doing it as profitably as it had hoped.
That news came in the form of a profit-warning for those who own UPS stock. The company said to expect earnings of $1.25 per share for its fiscal Q4 of last year, versus analyst estimates of $1.47. David Abney, CEO of United Parcel Service, said of last quarter:
“Clearly, our financial performance during the quarter was disappointing. UPS invested heavily to ensure we would provide excellent service during peak when deliveries more than double. Though customers enjoyed high quality service, it came at a cost to UPS. Going forward, we will reduce operating costs and implement new pricing strategies during peak season.”
UPS stock fell almost 10% by the time the closing bell rang.
United States Steel (X)
As if shareholders of United States Steel hadn’t been run through the wringer enough already since late September, X stock fell another 9% today, bringing the four-month pullback to a whopping loss of 53%.
Investors have seen the company waving several red flags recently, one of which was this week’s news that United States Steel would be shuttering plants and laying off more than 5,000 people. That announcement came just a couple of weeks after the steel company said it would be laying off more than 600 employees at a pipe manufacturing facility in Ohio.
Today’s big setback was the result of an industry downgrade from Goldman Sachs. The investment bank now expects iron ore prices to average 17% less than it had first guessed, after prices fell 47% last year. It’s a concern that could end up being big trouble for United States Steel.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.
