Stocks bounced back from a two-day rout on Thursday, at least partially inspired by jobless claims that rolled in slightly lower than expected.
Even with jobless claims near 15-year lows though, it’s going to take a little more than today’s 0.38% advance from the S&P 500 to shrug off the marketwide weakness we’ve seen over the past couple of weeks.
And for names like Whole Foods Market, Inc. (NASDAQ:WFM), Priceline Group Inc. (NASDAQ:PCLN) and Keurig Green Mountain Inc. (NASDAQ:GMCR), it’s going to take a whole lot of bullish work to undo Thursday’s meltdowns. Here’s what happened to each.
Whole Foods Market (WFM)
Whole Foods Market had a good run, but like most novel business ideas, it’s only a matter of time before competition starts to chip away at growth and loyalty to the premise fades. WFM shareholders came face-to-face with that reality today, sending the stock down a sharp 9.7%.
Last quarter, Whole Foods Market earned 43 cents per share of WFM, as expected. Sales were up a healthy 9.8% too. Same-store sales, however, slumped to 3.6% versus expectations for 5% growth. Investors are concerned last quarter’s slowdown is a symptom of a much bigger headwind currently in development.
Whole Foods Market only fanned those flames of concern when it also announced it would be opening stores next year that offered more value (read: “lower prices”) to millennials than its current format does. Analysts as well as WFM investors aren’t impressed. Jefferies analyst Mark Wiltamuth explained:
“Second store concepts don’t have a great track record in retail, and a startup store base will be too small to impact results. Investors may view this as a management distraction.”
Priceline Group (PCLN)
The good news: Priceline Group topped Q1 estimates for its top and bottom lines. The bad news is, its second quarter outlook was lackluster, spurring a 4% plunge in the value of PCLN shares.
All told, Priceline Group earned an operating profit of $8.12 per share on $1.84 billion in sales last quarter. Analysts were only expecting earnings of $7.80 per share of PCLN stock on $1.81 billion in revenue.
The current quarter, however, is going to be notably tough. Thanks to a still-frothy U.S. dollar, Priceline Group now expects a Q2 profit of something between $10.95 and $11.75 per share of PCLN, on revenue that should be between even and up 7% from year-ago levels. The pros were looking for, on average, a Q2 profit of $13.10 on a sales increase of 8%.
Keurig Green Mountain (GMCR)
On the surface, disappointing second quarter results from Keurig Green Mountain were the reason GMCR took a tumble to the tune of 9% on Thursday. In reality, there may be an even bigger, overarching reason GMCR stumbled today.
When all was said and done, Keurig Green Mountain earned $1.03 per share on $1.13 billion in revenue. Analysts had been expecting a profit of $1.05 per share of GMCR and $1.15 billion in sales.
While it’s a minor miss on the surface — and thoroughly justified by the company and its supporters — GMCR investors may innately be sensing there’s more working against Keurig Green Mountain than just cost headwinds and confusion regarding the compatibility of its different pods.
As Stifel Nicolaus analyst Mark Astrachan observed, the slow adoption of the Keurig 2.0 machine and lowered guidance could be a sign that the market is nearing saturation and therefore sales its coffee makers and refill cups are close to a plateau.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.
