Inspired by the upside of a tepid Q2 GDP growth report, investors — assuming any rate-hike plans were further delayed — poured into stocks on Friday. The S&P 500‘s gain of 0.16% and subsequent close of 2173.60 wasn’t quite a record high close, but today’s high of 2177.09 was an all-time peak.
Not every name jumped on the bullish bandwagon, though. CIGNA Corporation (NYSE:CI), Hartford Financial Services Group Inc (NYSE:HIG) and Western Digital Corp (NASDAQ:WDC) were each hit hard by earnings and warnings.
Here’s the deal.
CIGNA Corporation (CI)
Already losing ground when it became clear the Department of Justice was going to do everything it could to block its acquisition by Anthem Inc (NYSE:ANTM), CIGNA shares lost another 5% today after the health insurer missed its second-quarter estimates and subsequently cut its full-year guidance.
Last quarter — the company’s second quarter of the fiscal year — CIGNA earned $1.98 per share on revenue of $9.96 billion. The top line was close enough to expectations of $9.97 billion, but the bottom line was nowhere near the anticipated $2.39 per share of CI stock.
The company cited the swelling cost of participating in the Affordable Care Act’s health insurance exchanges when it went on to warn CI shareholders that it wouldn’t be earning the expected $8.95 to $9.35 per share in 2016. That guidance was pulled back to a profit of between $7.75 and $8.10 per share of CI, versus analyst estimates of $9.29.
Hartford Financial Services Group (HIG)
Insurer Hartford Financial Services Group posted a Q2 profit of 31 cents per share on revenue of $4.68 billion. The bottom line fell short of the anticipated 77 cents per share of HIG, and was 66% lower on a year-over-year basis. Revenue was flat with last year’s top line, but it came up a bit short of estimates as well.
CEO Christopher Swift explained in the second quarter earnings press release:
“Although many of our segments continued to generate solid results, the second quarter bottom line was disappointing, principally due to personal lines auto and P&C other operations asbestos and environmental.”
HIG ended the day down more than 9%.
Western Digital Corp (WDC)
Data storage maker Western Digital may have topped last quarter’s earnings estimates, but between a lackluster outlook and what appears to be an unexpected downside with its recent acquisition of SanDisk, WDC shares never had a prayer today.
The good news: Western Digital earned 79 cents per share on revenue of $3.5 billion in its recently completed fourth fiscal quarter, beating expectations of a profit of 71 cents per share of WDC on sales of $3.45 billion.
The bad news: The company’s guidance for the current quarter isn’t what the market was hoping to hear. Projected sales of between $4.4 billion and $4.5 billion were better than guesses of $4.28 billion, but the per-share profit-expectation of something between 85 cents and 90 cents per share fell short of the consensus estimate of 98 cents per share of WDC.
Fanning the bearish flames that sent WDC shares nearly 12% lower today was an expense surge from its SanDisk subsidiary that wasn’t equally matched by sales growth. More of the same is anticipated for the current quarter.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.
