With little news to motivate them on Friday (and further crimped by the effect of October’s option expiration day), stocks were content to drift out of the week on a quiet-but-fairly-bullish note. By the time the closing bell rang, the S&P 500 was at 2,033.11, up 0.46%.
It wasn’t an easy-breezy day for all stocks, however. Schlumberger Limited (NYSE:SLB), Kansas City Southern (NYSE:KSU) and Spirit Airlines Incorporated (NASDAQ:SAVE) all took some major shots from the bears following concerning news.
Kansas City Southern (KSU)
It’s not often a name that makes splashy headlines (good or bad), nor is it a name often found on a “best of” or “worst of” list. Today is proving to be an exception for railroad Kansas City Southern, though, as the 11% plunge KSU dished out on the last day of the trading week makes it the absolute biggest loser among all large-cap stocks.
Earnings were the culprit, of course. Revenue was lower to the tune of 7%, while earnings per share fell from $1.25 a year ago to $1.21 per share of KSU stock in its third quarter of 2015.
A tepid commodities market spurred the bulk of the year-over-year setback for KSU, although Kansas City Southern CEO David L. Starling noted that sequentially (from the second quarter), demand appeared to be improving.
Schlumberger Limited (SLB)
Just for the record, Schlumberger Limited was hardly the only oil/energy stock to tank today — Baker Hughes Incorporated (NYSE:BHI) and Halliburton Company (NYSE:HAL) both logged sizable losses of their own that rivaled the one taken by SLB. But, in that Schlumberger Limited is the biggest of the big energy names that dipped into the red ink today (and therefore created the most overall pain), plus the fact that SLB was the catalysts for the sector’s pullback on Friday, it gets the dubious honor of being singled out.
The good news is, Schlumberger Limited topped its third-quarter earnings estimates, profiting 78 cents per share versus analysts’ projections of 76 cents per share of SLB. The bad news is, the bottom line was nearly cut in half from the year-ago profit figure of $1.49 per share.
The real damage may have been done, however, by the news that the company was further cutting its production capacity, suggesting it doesn’t foresee a meaningful rebound in crude oil prices until at least 2017.
SLB was down more than 2% on Friday. Oil closed about 2% higher.
Spirit Airlines (SAVE)
Finally, Spirit Airlines shares tumbled 15% on Friday after the company offered a disappointing outlook that prompted a downgrade of SAVE from Morgan Stanley.
The good news is, Q3’s results from SAVE should roll in as previously guided. In fact, margins will likely be wider than anticipated for its third fiscal quarter. From the fourth quarter on into 2016, however, Spirit Airlines is concerned about low fares and acknowledged it’s paring back its capacity-growth effort.
The outlook was enough for Morgan Stanley to lower its stance on Spirit Airlines from an “overweight” to an “equal-weight”, and simultaneously lower it target price on SAVE from $66 to $53.
Morgan Stanley’s note to investors explained:
“Altogether, we believe the growth story, while still intact, has less appeal when margins compress closer to the industry average per our forecast.”
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.
