Uncertain as to whether or not a surge in job growth was good news or bad news (lest it accelerate a rate hike), traders spent the last session of the week on the fence. When all was said and done, the S&P 500 closed at 2,092.83, down a mere 0.14%.
Caesars Entertainment Corp. (NASDAQ:CZR), Esterline Technologies Corporation (NYSE:ESL) and Altria Group Inc. (NYSE:MO), however, were anything but on the fence today. Here’s why each one tanked.
Altria Group (MO)
Truth be told, the headwinds working against Altria Group have been building for a while. They simply became unbearable today, though, with MO shareholders finally accepting defeat and throwing in the towel.
On the surface, Friday’s news looks like a bit of a victory for Altria Group. It, along with its tobacco peers, agreed to drop a lawsuit levied against the FDA after the government watchdog agreed to at least reconsider its alarming label requirements for cigarette packaging. But it may be too little, too late. Earlier in the week so-called “big tobacco” was ordered by a Canadian court to fork over $15.6 billion to smokers who are now suffering the effects of smoking they say they weren’t adequately warned about.
With the risks of being in the business underscored once again, today’s 3% dip from MO brought the weekly loss to more than 5%. Worse, the selloff pulled MO below the critical 200-day moving average line.
Most other tobacco stocks dished out similar losses this week.
Esterline Technologies (ESL)
Aerospace and defense contractor Esterline Technologies didn’t just miss last quarter’s estimates .. it missed them by a wide margin, and then poured salt in the wound by reeling in its full-year outlook. Frustrated investors sent ESL down a jaw-dropping 12% as a result.
Last quarter, Esterline Technologies earned $1.20 per share on $500.1 million in sales. Problem: The pros were looking for a profit of $1.31 per share of ESL on $526.2 million worth of revenue.
Even worse, now Esterline Technologies is only expecting a profit of between $4.55 and $4.80 per share, versus a prior profit forecast of $5.35 and $5.75 per share of ESL. The analyst consensus before the revised figures were posted was a profit of $5.49 per share. The top-line forecast was also scaled back.
Caesars Entertainment (CZR)
There’s no arguing this casino and resort name was mismanaged, and there’s little doubt the company has been less than completely fair to current lenders in the way it handled itself (and its assets) right before bankruptcy became its only options.
The company’s restructuring chief, Randall Eisenberg, is right about one thing though — the lawsuits a handful of different creditors are filing now won’t help matters one bit, nor will they help the price of CZR stock.
Investors weren’t impressed. Nor were the creditors in question. The court system wasn’t swayed either. Earlier this week, U.S. District judge Shira Scheindlin decided these creditors had a right to sue for their share of whatever’s left of the company.
The announcement rekindled a downtrend for the stock, sending it lower by 30% for the week. The selloff was still going strong even on Friday, when CZR lost more than 10%.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.
