Why Southwest Airlines Co, AT&T Inc., and General Motors Company Are Today’s 3 Worst Stocks

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Earnings season came to Wall Street’s aid on Thursday, as the stock market rose for the fifth time in six sessions. Several major blue-chip bellwethers of American industry, after reporting strong quarters, helped to reassure investors that economic conditions just aren’t bad enough to get worried about.

southwest airlines co att inc general motors company todays worst stockThe same cannot be said for shares of Southwest Airlines (LUV), AT&T (T), and General Motors (GM), which each lost meaningful ground on Thursday.

Southwest Airlines (LUV)

LUV stock took off in morning trading today, adding as much as 3.4% as investors expected good things from the earnings call. Third-quarter earnings per share came in stronger than expected at 55 cents per share, beating consensus estimates by 3 cents. With the beat, LUV ushered in a fifth consecutive quarter in which the airline has posted record profits, a trend that has been largely aided by the secular decline in oil prices.

So why the slump today? Perhaps the market is pessimistic that Southwest can continue to maintain its extremely low fuel costs, which came in at just $2.99 per gallon, which was just 2 cents per gallon from being the lowest average among the four airlines that reported today.

AT&T (T)

Shares of wireless provider AT&T finished with 2.7% losses today, although T stock’s decline was a little more justified than LUV’s. The telecom disappointed on both earnings and revenue in the most recent quarter, so you’ll forgive investors for not sending T stock rocketing to record-highs.

AT&T is feeling the pain from its very questionable decision to make customers pay full price for smartphones in exchange for not locking into service contracts. T stock also didn’t respond well to AT&T slashing its full-year revenue forecasts.

On top of that, investors were more hungry for risk on Thursday, so T stock and its Dow-leading 5.3% dividend yield weren’t exactly in high demand today. On the upside, the dividend yield jumped to 5.5% after today’s drop.

General Motors (GM)

Like LUV stock, General Motors shares initially rose on Thursday, only to sluggishly make their way to the closing bell. InvestorPlace‘s own Jim Woods forecast what the automaker would have to do to impress Wall Street in his earnings preview yesterday:

“At the very least, Barra & Co. will have to deliver a bottom line of at least 97 cents per share (preferably 98 cents). That would be slightly better than the 96 cents per share the company earned in the same quarter a year ago, and also better than the average estimate of 95 cents — a penny lower year-over-year. I also think the top line will have to beat expectations, which call for approximately $39 billion — also a slight increase from the $38.98 billion one year ago.”

Unfortunately for GM stock, the Detroit automaker topped revenue estimates but failed to impress on earnings in the quarter. Revenue and EPS came in at $39.26 billion and 97 cents per share, respectively. Although GM CFO Chuck Stevens said the airbag recall was mostly in the past for the company, I’d tread cautiously around this stock and wait for the situation to improve before investing.

As of this writing John Divine held no positions in any of the stocks mentioned. You can follow him on Twitter at @divinebizkid.


Article printed from InvestorPlace Media, https://investorplace.com/2014/10/southwest-airlines-co-att-inc-general-motors-company-todays-worst-stock/.

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