Why Freeport-McMoRan Inc (FCX), Cracker Barrel Old Country Store, Inc. (CBRL) and Coach Inc (COH) Are 3 of Today’s Worst Stocks

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The bulls tried their best, but when push came to shove, they just couldn’t recreate the dead-cat bounce they mustered on Monday following last Friday’s plunge. The S&P 500 ended the session at 2125.77 today, down just a hair, allowing the bears to retain all of Tuesday’s 1.48% selloff.

Why Freeport-McMoRan Inc (FCX), Cracker Barrel Old Country Store, Inc. (CBRL) and Coach Inc (COH) Are 3 of Today's Worst StocksIt could have been worse, though … you could have owned Cracker Barrel Old Country Store, Inc. (NASDAQ:CBRL), Freeport-McMoRan Inc (NYSE:FCX) or Coach Inc (NYSE:COH). These three names led today’s bearish parade.

Here’s the deal.

Coach Inc (COH)

High-end handbag maker Coach was already watching its stock freefall, but the market fanned the bearish flames that have been scorching COH since July with an alarming downgrade.

Morgan Stanley did the deed, lowering its opinion on COH from “Market weight” to “Underweight.” Analyst Kimberly Greenberger explained:

“The catalyst to drive the stock higher is both consistent +LSD North America comps and a 19-20% Coach brand EBIT margin. However, we are increasingly skeptical Coach will be able to deliver this. With a 1000 bps more difficult comparison this quarter and 2100 bps more difficult by 4Q17, we think the probability of comps slowing below our +2% forecast is likely, especially given slowing category growth, ongoing high-income consumer weakness, tourist spending declines, and falling mall traffic.”

The salt in the wound? Morgan Stanley explicitly names Coach rival Michael Kors Holdings Ltd (NYSE:KORS) as a buyable alternative.

COH ended the day down 2.2%.

Freeport-McMoRan Inc (FCX)

COH wasn’t the only stock to suffer by the hands of a Morgan Stanley downgrade on Wednesday. Freeport-McMoRan shares did as well, with FCX losing 3.4% of its value after losing more than 8% yesterday.

The crux of the weakness — and downgrade to “Underweight” — is the same as Tuesday’s though … the recent sale of its oil assets in the Gulf of Mexico. Although it was never a great strategic fit for the gold and copper miner, it’s still a step back for the organization, and Freeport-McMoRan will ultimately lose money on the sale. The process of completing the sale is also an added expense.

Morgan Stanley analysts Evan Kurtz, Piyush Sood and Hunter Alley wrote of the downgrade of FCX:

“Further copper asset sales likely will struggle to push stock higher from current levels … Despite the significant progress on debt reduction, the balance sheet could become an issue for investors unless copper rallies to $3/lb. …”

Copper prices ended the day at $2.15 per pound.

Cracker Barrel Old Country Store, Inc. (CBRL)

Finally, Cracker Barrel may have done better last quarter than it did for the same period a year earlier. But, it didn’t do well enough, and disappointing guidance says the restaurateur isn’t planning on getting out of its slump anytime soon.

Last quarter — the company’s fourth fiscal quarter of the year — Cracker Barrel Old Country Store earned $2.12 per share on revenue of $745.6 million. Both were up from the year-ago comparables of $1.97 per share of CBRL and sales of $719.2 million. And, the top line was better than the expected $741.3 million. But, the bottom line fell short of estimates of $2.13.

It was the full-year outlook that took the bulk of the 7% toll on CBRL, though. Cracker Barrel anticipates earning between $7.95 and $8.10 per share on revenue ranging from $2.95 billion to $3.0 billion. Analysts were collectively expecting a profit of $8.32 per share and revenue of $3.01 billion.

As of this writing, James Brumley did not hold a position in any of the aforementioned securities.

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Article printed from InvestorPlace Media, https://investorplace.com/2016/09/freeport-mcmoran-inc-fcx-cracker-barrel-old-country-store-inc-cbrl-coach-inc-coh-three-todays-worst-stocks/.

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