Recovering from yesterday’s sizable setback, the bulls charged early today and never let go, mostly inspired by the absence of any bad news. By the time the closing bell rang, the S&P 500 was at 2185.79, up 0.47%.
Not every stock jumped on the bullish bandwagon today, however. Flowers Foods, Inc. (NYSE:FLO), General Growth Properties Inc (NYSE:GGP), and Valeant Pharmaceuticals Intl Inc (NYSE:VRX) were all deep in the red, though for understandable reasons.
Here’s what investors need to know.
Valeant Pharmaceuticals Intl Inc (VRX)
In the grand scheme of things, Valeant Pharmaceuticals shareholders can’t be too surprised their VRX shares were sent 10% lower today, just two days after its Q2 numbers and 2016 outlook sent the stock up a solid 25%. The drama-laden company has reliably found just as many ways to implode as it has found to rally over the course of the last several months, and nothing has changed on that front.
The latest chapter of the saga? A reprisal of a matter some thought had been put to bed. The company’s relationship with specialty pharmacy Philidor is being scrutinized again on the possibility that Valeant may have intended to commit fraud and then paid the pharmacy to cover up the alleged activity. If so, that would escalate the matter from merely improper to criminal.
Flowers Foods, Inc. (FLO)
Flowers Foods may have managed to meet its second-quarter earnings estimates, but that was the only good news it had for FLO shareholders today. Q2’s top line came up short, and the revised 2016 guidance was a letdown.
Last quarter, Flowers Foods earned the expected 26 cents per share. Sales of $935 million missed the outlook of $949 million though. Worse, the company cut its full-year earnings outlook from a range of $1 to $1.06 per share of FLO to a range of only 90 cents to 95 cents per share.
CEO Allen Shiver commented on the second quarter numbers and outlook, “Our revised guidance takes into consideration soft consumer demand in the bakery category, as well as heightened promotional activity in our industry.”
FLO closed down 7.4% for the day.
General Growth Properties Inc (GGP)
Finally, plenty of retail real estate investment trusts used more than their fair share of red ink today. Kimco Realty Corp (NYSE:KIM) was off by more than 2%, while Simon Property Group Inc (NYSE:SPG) fell just as much. General Growth Properties fell the most though, with GGP losing 3.4% of its value on Thursday.
Blame department store chain Macy’s Inc (NYSE:M) for the widespread pullback from retail REITs, however. In conjunction with its second-quarter report, the retailer unveiled a turnaround plan that includes the closure of 100 of its stores. Those exits will leave mall operators like General Growth Properties and Simon Property with an empty slot at their shopping centers, and punch a hole in their rent payment stream.
Macy’s has not identified which of the 100 stores are on the chopping block, but the market is saying GGP is more vulnerable to the closures than other mall operators.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.