It took a while to sink in, but once traders realized the minutes from last month’s Federal Reserve meeting essentially said that June was too early to start raising interest rates, the buyers gradually trickled back in. When all was said and done, the S&P 500 closed at 2,125.85… down two points from Tuesday’s close.
Etsy Inc. (NASDAQ:ETSY), Southwest Airlines Co. (NYSE:LUV) and Lowe’s Companies, Inc. (NYSE:LOW), however, were nowhere near as lucky. These three names were among the worst of the worst on Wednesday, though for understandable reasons.
Online craft-goods marketplace Etsy is learning the hard way the harsh result of falling short of expectations. ETSY shares were down 18% after reporting its first-ever numbers as a publicly-traded company… numbers that largely failed to impress anyone.
Giving credit where it’s due, the top line for Etsy grew 44% on a year-over-year basis, reaching $58.5 million. Unfortunately, that still fell a little short of the $59 million analysts were collectively expecting, and the sales “beat” most investors were probably counting on.
Meanwhile, the net loss incurred by Etsy last quarter exploded sevenfold, and the per-share profit (or loss, in this case) wasn’t even close to meeting expectations. The pros were looking for net income of three cents per share of ETSY, but the company booked a loss of twelve cents per share.
Southwest Airlines (LUV)
Just for the record, all the major airlines like American Airlines Group Inc. (NASDAQ:AAL) and United Continental Holdings Inc. (NYSE:UAL) dipped deep into the red ink on Wednesday. It was Southwest Airlines, however, that dished out the most pain to most shareholders. LUV shares fell more than 9% today, reaching a multi-month low in the process.
The prod for the pullback from LUV and its peers was mostly the sudden realization that all the carriers are increasing capacity, which could cut revenues and margins. Southwest Airlines CFO Tammy Romo explained at the Wolfe Research transportation conference on Tuesday that her employer was aiming to expand capacity by 7% to 8% this year.
Delta Air Lines, Inc. (NYSE:DAL) plans a more tempered capacity growth pace of around 2%, but between Southwest’s and Delta’s plans to add capacity at the same time American Airlines is planning on reducing fares in order to compete with lower-cost carriers, investors of all airline stocks are concerned these companies are setting themselves up for a fiscal disaster.
Lowe’s Companies (LOW)
Home improvement retailer Lowe’s Companies managed to grow the top and bottom lines last quarter. It just didn’t grow them enough. As a result, the miss of sales and profit estimates sent LOW shares down nearly 5% today.
In its first fiscal quarter of 2015, Lowe’s earned 70 cents per share on $14.13 billion in sales. While those figures were 15% and 5% better than their year-ago comparisons (respectively), both fell short of analyst expectations. Analysts were looking for a profit of 74 cents per share of LOW and $14.23 billion worth of revenue.
The bulk of the pullback from LOW, however, may have been spurred by its performance versus rival Home Depot Inc. (NYSE:HD). Same-store sales for Lowe’s Companies grew a solid 5.2%, but Home Depot managed to pump up its same-store sales last quarter by 6.1%.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.