The stock market soared on Tuesday, climbing on momentum from positive earnings reports and favorable readings on the U.S. job market. Major benchmarks were up roughly 2% to 3%, and many investors took heart in how quickly stock indexes were able to bounce back from the severe drop they saw over a two-day period last week. Yet even with good news helping stocks across the market, there were a few companies that found themselves left out of the rally. Domino's Pizza (NYSE: DPZ), Innophos Holdings (NASDAQ: IPHS), and W.W. Grainger (NYSE: GWW) were among the worst performers on the day. Here's why they did so poorly.
Domino's falls down
Shares of Domino's Pizza declined 5% after the company released its third-quarter financial report. The popular pizza chain announced solid growth in retail sales that helped earnings per share soar by more than 65% from the year-ago period. However, investors weren't satisfied with Domino's same-store sales growth numbers, which included gains of just 3.3% internationally and 4.9% at company-owned locations domestically. For a company that's routinely put up double-digit-percentage gains in comparable sales figures, the realization that Domino's period of hyper-growth is coming to an end seemed to chill investor sentiment despite the impressive bottom-line growth that the pizza chain produced.
Image source: Domino's Pizza.
Innophos can't satisfy investors' appetites
Innophos Holdings fell nearly 17% in the wake of the issuance of its preliminary third-quarter results and new full-year guidance. The specialty ingredient company said it now expects 2018 growth to come in between 10% and 12%, down from its previous 12% to 14% range due to weaker sales in the second half of the year. Innophos made a strategic decision to discontinue some of its low-margin operations in order to concentrate on more lucrative parts of its business, and that will be responsible for much of the top-line contraction. Higher ingredient costs have affected many food companies, and they've forced Innophos to increase the prices it charges its customers as well. Although Innophos has confidence in its long-term strategic moves, investors aren't happy with the short-term impacts of the decisions it's made recently.
Grainger's in need of repair
Finally, shares of W.W. Grainger finished lower by 12%. The supplier of maintenance, repair, and operating products said that its revenue rose 7% during the third quarter from the previous year's period, with adjusted earnings jumping 44% due to better margin figures and lower taxes. Yet despite the strong performance, investors seem to be uncertain about whether the company's rising sales from large and medium-sized customers will be able to continue indefinitely into the future. As long as Grainger can keep its overall expenses under control without jeopardizing its sales, today's decline seems like an overreaction to concerns that might very well never materialize.
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