Why Walt Disney Co (DIS), Priceline Group Inc (PCLN) and Office Depot Inc (ODP) Are 3 of Today’s Worst Stocks
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Try as hard as they might, the bulls just couldn’t get the market back into the black for the day. Wednesday was the second losing day in a row, with the loss of 0.04% dragging the S&P 500 back to a close of 2,474.02 … a level below some key technical support lines. Still, it ended the session pointed higher.
That was a chump-change loss compared to the baths Office Depot Inc (NASDAQ:ODP), Walt Disney Co (NYSE:DIS) and Priceline Group Inc (NASDAQ:PCLN) took on hump-day, however. Here’s what wrecked each of these names.
Priceline Group Inc (PCLN)
The good news is, online travel agent Priceline Group topped last quarter’s earnings estimates. The bad news is, its guidance for the quarter currently underway was disappointing. Traders opted to see the glass as half-empty, sending PCLN stock to a loss of 6.9% on Wednesday.
For the second quarter ending in June, turned $3.02 billion worth of revenue into earnings of $15.14 per share, easily topping expectations for a profit of $14.25 per share of PCLN and sales of $3.0 billion. The third quarter isn’t going to be as impressive though. The market was expecting income of $34.14 per share, but Priceline said it only expected to report a per-share profit of between $32.40 and $34.10 for the third quarter.
Fanning those bearish flames that burned PCLN on Wednesday was an inadvertently alarming comment from CEO Glenn Fogel. He noted:
“When you have very strong growth opportunities, you have a lot of players come in and the players come in with a lot of capital.”
Walt Disney Co (DIS)
It’s a curious twist of fate … many investors said they wanted Walt Disney to do it, but now that Disney is actually doing it, at least some of those fans and followers don’t like the decision.
What decision? On Wednesday, media and theme park giant DIS announced it would finally be unveiling its own streaming subscription service, including access to sports programming. The maneuver also ultimately means Disney will be pulling its content from Netflix, Inc. (NASDAQ:NFLX).
Responses to the decision — which won’t go into effect until 2019 — were mixed, though the 3.9% setback DIS shares suffered today suggests most investors agree with Michael Browne, fund manager at Martin Currie, that the move is too little, and too late.
Of course, at least part of the pullback can be attributed to the fact that Disney missed its fiscal Q3 revenue forecast.
Office Depot Inc (ODP)
Last but not least, though a poor earnings report from office supply retailer Office Depot shouldn’t come as a surprise given the losing battle it’s fighting with Amazon.com, Inc. (NASDAQ:AMZN). The 25.9% tumble ODP shares took today makes it clear the earnings and sales miss for the company’s second quarter were indeed a surprise.
For the period ending in June, Office Depot earned 6 cents per share, missing estimates of 8 cents, while revenue of $2.36 billion fell short of the $2.44 billion analysts were expecting. Year-over-year revenue fell 27%. Particularly troubling was the fact that a statement from the company conceded Amazon’s rival service was (still) taking a toll.
Loop Capital Markets analyst Anthony Chukumba can’t get excited about ODP until the company clearly does something to stop Amazon’s growing presence in the office supply space … which may never happen.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.
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