Picking up where they left off on Thursday, the bears decidedly ended the week in control of things. Friday’s 1.78% pullback (fueled by little else besides pessimism and perhaps some triple-witching pressure) left the S&P 500 at 2005.02… 0.3% under the previous week’s close.
Leading the bearish charge were Boeing Co. (NYSE:BA), Williams Companies Inc. (NYSE:WMB) and CarMax, Inc. (NYSE:KMX), each for understandable reasons. Here’s what investors need to know.
CarMax, Inc. (NYSE:KMX)
When sales of new automobiles in the United States tapered off in November, some were hoping buyers were at least being diverted to used car purchases, which still removes overall inventory out of the loop and indirectly fuels the car-making industry. That wasn’t the case either, however… at least not for used car dealer chain CarMax. The company posted a surprisingly disappointing Q3 earnings miss, and KMX owners paid a rather steep price for the shortfall.
Last quarter, revenue for CarMax grew 4.1% on a year-over-year basis to $3.54 billion. Yet, income fell a little more than 1% to $128.2 million. On a per-share basis, the profit of 63 cents versus the profit of 60 cents per share KMX earned a year earlier offered a little solace, though not enough. Same-store (same-lot?) sales of cars fell almost 1% on a unit-for-unit basis.
The figures also fell short of analyst expectations. The pros were calling for a profit of 68 cents per share of KMX on sales of $3.61 billion.
KMX fell more than 6% on the news.
Boeing Co. (NYSE:BA)
Aircraft manufacturer Boeing was grounded today, extending a bearish effort started on Thursday after it was announced that Wells Fargo had downgraded BA stock from an outperform to a market-perform.
Wells Fargo analyst Sam Pearlstein explained:
“Some of the concerns we think are already well appreciated by investors include: (1) the likelihood of a 777 rate cut from 8.3/mo to 7/mo; (2) very weak 747 demand; (3) lower oil + higher interest rates = lower demand for new planes (i.e., book/bill <1x); and (4) lower medium-term defense revenue growth relative to peers following the competitive LRS-B (bomber) loss.”
Today’s 4% drubbing from BA brings the two-day pullback to 6%.
Williams Companies Inc. (NYSE:WMB)
Despite an upgrade from Jefferies & Co. today, Williams Companies shares were upended by yet another pullback in the price of crude oil.
Jefferies upped its opinion on WMB from a hold to a buy, setting a price target of $43 on the stock. It wasn’t enough to overcome the 1% dip from crude prices. In light of the fact that crude is now under $35 per barrel, though, even a modest dip in oil prices spurs an enormous amount of pain for oil companies.
Crude is now down more than 70% from its mid-2014 high, while today’s 9% selloff of WMB tops off a 66% pullback from its June-2015 peak.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.
