With no news of any significance to push stocks higher or lower, most of the major indices finished the day right at a breakeven. The S&P 500’s close of 2,080.15, for instance, was a mere 0.04% better than Monday’s close.
Not every stock ended Tuesday’s trading on the fence, though. Burlington Stores Inc. (NYSE:BURL), Southwest Airlines Co. (NYSE:LUV) and Micron Technology, Inc. (NASDAQ:MU) all ended the session more than a little in the red. Here’s why.
Southwest Airlines (LUV)
Still feeling the pressure of Monday’s downgrade of three other airlines, Southwest Airlines poured salt in its own wounds today when it reported May’s traffic numbers.
Remember all the capacity — seats — peers like American Airlines Group Inc. (NASDAQ:AAL) and United Continental Holdings Inc. (NYSE:UAL) were joyfully adding just a few months ago after plunging oil prices led airlines to believe air-travel was about to ramp up? Southwest Airlines was in the same boat, though not as blatantly.
Well, it looks like LUV is regretting that decision as much as AAL and UAL are now. With May’s data suggesting Q2’s unit (per-seat) revenue will be between 4% and 8% lower, Southwest is already planning to whittle down some of that capacity it just added.
LUV shares fell nearly 4% on the not-entirely-surprising news.
Micron Technology (MU)
Already in the throes of a pullback, Micron Technology shares were flung to almost-new 52-week lows on Tuesday on the heels of a downgrade of MU stock.
The deed was done by Drexel Hamilton analysts, who lowered their opinion on MU from a “hold” to a “sell.” Drexel Hamilton analyst Richard Whittington explained:
“Predicated upon a view Samsung’s strategic interests bring willingness to accept lower memory margins, DRAM price drops are liable to continue. DRAM price weakness has spread to mobile, reducing margins and earnings estimates as Samsung brings process cost drops to customers.”
Whittington also moved his price target for Micron Technology down to $20 per share. Even with today’s 3% plunge, MU is still trading well above level, suggesting there could be more downside ahead.
Burlington Stores (BURL)
Last but not least, Burlington Stores were slammed today, not because of a Q2 sales slump, but because Q2’s sales just weren’t good enough. That said, the more likely — though also less touted — reason BURL shares were down more than 8% may have more today with a planned wage increase that could make a noticeable dent in the discount retailer’s future bottom lines.
All told, Burlington Stores earned 41 cents per share on revenue of $1.18 billion last quarter. The bottom line topped estimates for a profit of 40 cents per share of BURL, and the top line handily topped the year-ago revenue total of $1.13 billion. Analysts, however, were counting on sales of $1.21 billion.
While the revenue miss is alarming, BURL investors may actually be more spooked by the company’s decision to raise worker’s wages to a minimum of $9.00 per hour on July 5. The company reports that the higher wage expense will be offset in other ways, but Burlington Stores investors don’t seem convinced.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.
