While the market didn’t close at its lows for the day, there’s no denying that the Federal Reserve took a toll on stocks this afternoon by virtue of its decision to hold interest rates steady, and then alluding to economic weakness. The S&P 500 finished the day at 1882.95, down 1.09%.
It was much worse for some stocks, however. Textron Inc. (NYSE:TXT), Energy Transfer Equity LP (NYSE:ETE) and VMware, Inc. (NYSE:VMW) led the market’s bearish charge on Wednesday. Here’s what investors need to know about each name.
Textron Inc. (TXT)
Textron didn’t say much of anything that investors liked today.
Last quarter, aircraft maker Textron earned 82 cents per share on $3.92 billion worth of revenue. Analysts, however, were calling for a top line of $4.18 billion and earnings of 83 cents per share of TXT.
Its guidance wasn’t very encouraging, either. The company now sees per-share earnings of $2.60-$2.80 for fiscal 2016, versus a consensus estimate of $2.88 per share for the current year. The revenue outlook also fell a little short of analysts’ projections. TXT finished the day 13% lower.
Though not a direct competitor, Boeing Co (NYSE:BA) lost 9% of its value today on a similarly-tepid 2016 outlook. Some are suggesting that aircraft sales may have already hit a cyclical peak… a possibility supported by the fact that both aircraft companies are now facing a headwind.
VMware, Inc. (VMW)
Virtualization software company VMware did reasonably well last quarter. It’s just not going to do well enough in the current quarter, or the current year, to satisfy the market. VMW shares lost nearly 10% of their value today following the Q4 report.
Earnings of $1.00 per share topped estimates for a profit of 98 cents per share of VMW. Last quarter’s revenue of $1.87 billion also topped estimates of $1.85 billion. For all of 2016, however, earnings are expected to roll in somewhere between $4.07-$4.16 per share on revenue of $6.79 billion-$6.94 billion. Analysts had been modeling a bottom line of $4.70 per share of VMW on sales of $7.21 billion.
Between the lackluster outlook, the exit of CFO Jonathan Chadwick, and news that VMware was cutting 800 jobs in an effort to cut costs, Robert W. Baird saw fit to downgrade VMW from an “outperform” to a “neutral” rating, fanning the bearish flames.
Following the news, Pacific Crest analyst Rob Owens wrote:
“Deceleration leaves us on the sidelines. Emerging businesses showed some bright spots, but the core compute business remains a large portion of the revenue mix, which sets up 2016 for declines in growth. Investor concerns also are likely to persist over the Dell acquisition and the issuance of a tracking stock. We wait for signs of stabilization before becoming more constructive on shares.”
Energy Transfer Equity LP (ETE)
Last but not least, despite many investors’ wishes, particulars involving the union of Energy Transfer Equity LP and Williams Companies Inc (NYSE:WMB) remain unchanged. Disgruntled ETE shareholders made their feelings known via a 10% tumble.
The deal has been planned for months, but the ongoing demise in the price of oil may make it tough for Energy Transfer Equity to handle the $6 billion in debt the company will be taking on to acquire Williams Companies. There was some hope that the deal’s terms might be renegotiated, but ETE affirmed the original agreement today.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.
