The new trading week may not have gotten started on a firm footing, but by the time the closing bell rang, the bulls had woken up and gotten back to work. The S&P 500 ended the session at 2051.6, up 0.1%.
It wasn’t a great start to the new week for all stocks, though. Sherwin-Williams Co (NYSE:SHW), Sprint Corp (NYSE:S) and United States Steel Corporation (NYSE:X) all hit the ground running … in the wrong direction.
Here’s what investors need to know.
Sherwin-Williams Co (SHW)
After loving the 20% run-up Sherwin-Williams shares dished out between January’s low and Friday’s close — much of which spurred by optimism surrounding the potential acquisition of rival The Valspar Corp (NYSE:VAL) — investors were taken aback by the actual details of the deal.
All told, Sherwin-Williams is going to shell out $11.3 billion to buy Valspar, paying $113 per share of VAL. That’s a 41% premium to the average price of VAL over the course of the past month.
As Jim Cramer properly explained, the pairing gives the two united entities some pricing muscle with retailers like Home Depot Inc (NYSE:HD), which had been playing the two paint companies off of one another as a means of securing better wholesale prices. But, with such a generous price being offered for Valspar, there’s not a lot of perceived upside for Sherwin-Williams.
SHW ended the session down 5%.
Sprint Corp (S)
Don’t look for a specific reason Sprint shares were down roughly 2% on Monday; you probably won’t find one. Rather, the modest but noteworthy pullback from S today was most likely the result of follow-through on last week’s 13% selloff, as the market had some more time to digest just how much trouble the struggling wireless carrier is in.
That said, it’s likely Sprint started the new week out on the wrong foot with more than a little help from a jab taken at the company late Friday. That jab? Wells Fargo & Co (NYSE:WFC) says the carrier’s recent churn rate is likely to increase this quarter.
It’s not a tough idea to believe. A wide swath of subscribers added two years ago are also about to see their contracts expire. Moreover, the company has been throwing everything but the kitchen sink at prospective customers in order to inspire them to defect from rival wireless providers. Those subscribers that jumped from one carrier to another are just as apt to jump back to a rival carrier.
Either way, a high churn rate isn’t an encouraging metric.
United States Steel Corporation (X)
Last but not least, shares of United States Steel lost nearly 4% of their value on Monday, spurred lower by Friday’s news it was going to curtail production and layoff workers, which was following by a key analyst downgrade of X today.
Despite the recent rebound effort from most commodities, it just wasn’t enough for U.S. Steel to keep all of its lights on. Several mills are slated to be closed, with nearly 800 jobs being put on the chopping block.
The news was enough to prompt a downgrade from Jeffries, from a “Hold” to an “underperform.” Jeffries also cut its target price on X from $10 per share to $6.50.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.
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