The S&P 500 got less than half a point away from hitting a record high on Tuesday, but it just wasn’t meant to be. When all was said and done, stocks gave up most of their intraday gain, with the S&P 500 closing at 2186.9, up only 0.2%.
It could have been worse though, and for owners of J M Smucker Co (NYSE:SJM) Mylan NV (NASDAQ:MYL) and Zoe’s Kitchen Inc (NYSE:ZOES), it was.
Here’s why.
J M Smucker Co (SJM)
Earnings season isn’t over yet … unfortunately for owners of J M Smucker. SJM led the bears today, losing 8% of its value in the wake of a revenue miss and a similarly weak outlook.
Last quarter, food company J M Smucker earned $1.86 per share on sales of $1.82 billion. The bottom line was better than the anticipated profits of $1.74 per share of SJM, but the top line fell short of the expected revenue of $1.89 billion.
Looking ahead, the company expects full-year revenue to come on flat to slightly down, largely on weak demand for pet food. It recently got into the pet food business with last year’s acquisition of Big Heart Pet Brands, but it has proven to be a disappointing decision, with most pet owners migrating to higher-end, higher quality brand names.
Mylan NV (MYL)
U.K.-based biopharma outfit Mylan may have pushed its luck a little too far, for a little too long.
After years of mostly unchecked and unmerited price hikes for the relatively simple EpiPen (the auto-injecting device people with strong allergic reactions often carry with them as a safety precaution), the U.S. Senate Judiciary Committee Chairman, Chuck Grassley, bluntly asked Mylan CEO Heather Bresch to explain why the retail price of the EpiPen had soared 400% since 2008.
So far, the federal government’s interest is only an unofficial one, but in light of how it has handled rampant drug price hikes of late, the scrutiny could become official in the near future. It’s not the kind of attention Mylan wants, sending MYL shares 4.76% lower in response.
Zoe’s Kitchen Inc (ZOES)
Finally, while SJM may have been hit hard on the heels of a revenue miss and a lackluster outlook, it wasn’t hit nearly as hard as shares of casual restaurant chains Zoe’s Kitchen were following its second-quarter numbers. ZOES fell a whopping 17.6% on Tuesday, as terrified investors were sent scurrying.
Actually, last quarter’s numbers weren’t bad in and of themselves. Earnings of 6 cents per share of ZOES were up 20% from the prior year’s Q2 per-share earnings of 5 cents. And, revenue grew 22% on a year-over-year basis, fueled by a 4% improvement in same-store sales. Sales of $66.3 million, however, fell short of analyst estimates by about 1%.
For all of 2016, Zoe’s Kitchen expects to report revenue of between $277 million and $280 million, down from previous guidance of between $277 million and $281 million. Same-store sales are forecasted between 4% and 5%, versus a prior growth outlook of between 4.5% and 6.0%.
It’s not a huge peel-back, but ZOES shares were priced for spectacular growth. When investors didn’t get what they expected, they pulled the plug, en masse.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.
