Why Altria Group Inc (MO), Starbucks Corporation (SBUX) and Western Digital Corp (WDC) Are 3 of Today’s Worst Stocks

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It was touch and go all day long, with most of the indices waffling between a loss and a gain in the wake of Q2’s first GDP growth reading. The 2.6% improvement was strong, though shy of expectations, confusing investors. By the time the closing bell rang though, the S&P 500 Index was down 0.13% to close at 2,472.10 for the week.

Why Altria Group Inc (MO), Starbucks Corporation (SBUX) and Western Digital Corp (WDC) Are 3 of Today's Worst StocksShareholders of Western Digital Corp (NASDAQ:WDC), Starbucks Corporation (NASDAQ:SBUX) and Altria Group Inc (NYSE:MO) weren’t so lucky though, with these three names losing much, much more ground following the release of last quarter’s earnings reports.

Altria Group Inc (MO)

In retrospect, Thursday’s pre-earnings gain from Altria Group only made today’s setback a little more painful. That is to say, yesterday’s 3.2% advance from MO allowed today’s 9.5% tumble to be that much more dramatic.

Blame the Food and Drug Administration, mostly. The government agency announced today it would seek to curb the amount of nicotine found in cigarettes. A statement from the regulator explained:

“Because nicotine lives at the core of both the problem and the solution to the question of addiction, addressing the addictive levels of nicotine in combustible cigarettes must be part of the FDA’s strategy for addressing the devastating, addiction crisis that is threatening American families.”

That coupled with Altria’s Q2 so-so earnings meant MO investors had little to cheer about heading into the weekend.

Starbucks Corporation (SBUX)

MO wasn’t the only major name to be upended following a lackluster second-quarter report. Coffee-house chain Starbucks also failed to impress, reporting a profit 55 cents per share on sales of $5.66 billion Thursday evening. Analysts were calling for earnings of 55 cents per share of SBUX, though the company missed analysts’ revenue outlook of $5.74 billion. The results were more or less in line with year-ago levels, but also notably weaker than Starbucks’ own expectations.

The prod for the bulk of the 9.2% selloff SBUX dished out on Friday, however, likely had more to do with the company’s outlook than it did last-quarter’s results. Without offering any specifics, CFO Scott Maw painted a grim picture of the headwind working against the company right now.

Making matters worse for SBUX was the decision to close all 379 of its Teavana stores. At one point not so long ago, tea was supposed to be the company’s next big growth engine.

Western Digital Corp (WDC)

Finally, computer disk drive maker Western Digital topped last quarter’s earnings and sales estimates in a pretty handy fashion. The company’s outlook, however, was less than WDC shareholders were hoping for.

For its fourth fiscal quarter ending in June, Western Digital turned $4.84 billion worth of sales into a profit of $2.93 per share. The pros were only calling for earnings of $2.83 per share of WDC on revenue of $4.8 billion. The company isn’t especially optimistic about the foreseeable future though.

Also weighing in on Western Digital shares was pessimism on Seagate Technology PLC (NASDAQ:STX), which did poorly last quarter. ALthough Seagate and Western Digital aren’t exactly interchangeable, they’re close enough for investors to assume what’s bad for one can’t be good for the other.

It was all enough to send WDC lower to the tune of 7.5% for the session.

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


Article printed from InvestorPlace Media, https://investorplace.com/2017/07/why-altria-group-inc-mo-starbucks-corporation-sbux-and-western-digital-corp-wdc-are-3-of-todays-worst-stocks/.

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