After one too many days of uncertainty regarding the matter, a lack of a bailout for Greece finally came back to haunt U.S. stocks today. The S&P 500 finished Wednesday’s session at 2,108.58, down 0.74%.
It could have been worse, though. In fact, it was worse if you owned a stake in Staples, Inc. (NASDAQ:SPLS), E I Du Pont De Nemours And Co. (NYSE:DD) or Monsanto Company (NYSE:MON), each of which lost much more ground than the broad market did.
Monsanto Company (MON)
Seed and fertilizer outfit Monsanto Company may have topped last quarter’s earnings estimates, but there was little else the company reported this morning that the corporation could put a positive spin on.
The good news: Monsanto Company earned $2.39 per share in its recently completed Q3, on $4.58 billion in revenue. That bottom line trounced earnings expectations of only $2.07 per share.
The bad news: Analysts were looking for a top line of $4.61 billion for Monsanto’s third quarter. Worse, the company now believes it will merely break even for the current quarter, versus the consensus estimate of a profit of 31 cents per share of MON.
MON shares closed 5.6% lower on Wednesday.
E I Du Pont De Nemours (DD)
The impending spinoff of performance chemicals division Chemours from parent company E I Du Pont De Nemours — better known as DuPont — is widely being seen as a step in the right direction. But, as long as Chemours remains under the DuPont umbrella, the value of DD at least partially reflects the value of Chemours on its own.
That reality became a problem for DD shareholders today after JP Morgan began coverage of the yet-to-be-spunoff company with an “underweight” rating. JP Morgan analyst Jeffrey Zekauskas’ concern is that Chemours is already fully-valued as is, and then some. Moreover, Zekauskas feels Chemours plans on cutting its dividend right out of the gate as a new publicly-traded entity.
Concerned that the Chemours portion of the price of DD shares is worth less than once thought, the market sent E I Du Pont De Nemours down more than 3% during today’s trading.
Staples (SPLS)
A mere two days ago it looked like the merger between office supply store chains Staples and Office Depot Inc. (NASDAQ:ODP) was a done deal, in that it has been approved by shareholders. Today, however, the much-desired union of Staples and Office Depot isn’t being seen as a sure thing, which sent SPLS lower to the tune of nearly 4%.
The concern was sparked by a decision made on Tuesday by a federal judge to block the comparable merger of food suppliers SYSCO Corporation (NYSE:SYY) and privately-held U.S. Foods. The concern? The pairing could potentially hurt competition within the food distribution industry, allowing food prices to swell unfairly.
Though office supplies are available at many other outlets besides Staples and Office Depot, investors are understandably concerned that the Sysco decision is a sign that the Justice Department is now taking a hawkish stance, striking down deals that even merely might spur non-competition issues. That concern hit SPLS shares — as well as ODP shares — right on the chin on Wednesday.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.
