Once again the major market indices got within reach of new highs, and once again the bulls just couldn’t finish the job. While still within reach of a break above recent highs, the S&P 500 ended the day at 2,097.29, down 0.15%.
Leading the bearish charge were Under Armour Inc. (NYSE:UA), Harley-Davidson Inc. (NYSE:HOG) and Shake Shack Inc. (NYSE:SHAK). Here’s what happened.
Harley-Davidson (HOG)
Iconic motorcycle maker Harley-Davidson may have topped Q1 earnings estimates, but investors still aren’t happy. The company reeled in a key outlook for the full year, sending HOG down nearly 10% for the trading session.
The good news: Last quarter, Harley-Davidson booked a profit of $1.27 per share, topping estimated of $1.24 as well as the year-ago bottom line of $1.21 per share of HOG.
The bad news: The company doesn’t plan on offering discounts comparable to the ones its competitors are extending to buyers, and as a result, it expects to ship fewer motorcycles than had been anticipated for 2015. Harley-Davidson now expects to deliver between 276,000 and 281,000 units this year, versus a prior forecast of somewhere between 282,000 and 287,000.
Shake Shack (SHAK)
Shareholders of recent IPO Shake Shack are facing the first real headwind seen since the stock’s initial volatility was burned off in February. Up more than 60% since February 17th (with most of that materializing in just the past couple of weeks) and ripe for a dip, SHAK lost nearly 6% of its value today.
The prod for the pullback was a downgrade from research firm Stifel. Analysts Paul Westra and Michael Olsen noted:
“…given the recent price appreciation of Shake Shack shares, we reduce our rating to Hold from Buy based on valuation alone. In short, we remain confident in our unchanged bullish view on the two fundamental parts of the Shake Shack story within our Stifel Investment Framework…We make no changes to our above-consensus 1Q15/2015/2016 EPS estimates of -$0.02E/$0.06E/$0.10E (vs. consensus’ -$0.03E/ $0.05E/$0.09E).”
Under Armour (UA)
In retrospect, investors probably should have realized Under Armour was setting up a “buy the rumor, sell the news” event for its stock today, with the Jordan Spieth serving as the cherry on top of the effort.
On Tuesday, UA shares fell nearly 5% after Under Armour reported first quarter results that didn’t justify the stock’s 34% rally over the course of the past three months. The athletic apparel maker earned the expected five cents per share last quarter, but still fell short of the year-ago profit of six cents per share of UA despite the 25% improvement in the year-over-year top line.
Some investors were clearly expecting a sizable earnings beat from Under Armour, buying UA shares on Monday at a price that was nearly 90 times the company’s trailing earnings and close to 60 times its projected income for 2015.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.
