The trading week came to a close on a relatively bullish foot, perhaps spurred by solid December retail sales report. They were up 0.6%, month to month. The S&P 500 ended the session at 2,274.64, up 0.18%. That wasn’t enough to push the index to a new record high, but it continues to hover just below those levels.
Here’s what went wrong for each one.
Infosys Ltd ADR (INFY)
Infosys may have topped its third-quarter earnings estimates, but its outlook spooked investors who sent INFY to a loss of 4.9% for the day.
In its fiscal third quarter of the year, Infosys earned 24 cents per share on $2.55 billion in revenue. Analysts were only looking for earnings of 23 cents per share of INFY, but those same pros were also calling for a $2.58 billion top line. The company also adjusted its current-year revenue growth outlook from a range of 8% to 9% to a narrower range of 8.4% and 8.8%. The market may have been pricing in nothing but a positive adjustment.
Infosys specifically noted it was concerned that suggested legislation regarding immigration and foreign workers could present problems for the company by crimping the number of qualified workers accessible to the technology outfit. Specifically, legislation has recently been unveiled that would close the H-1B loophole that allows U.S. companies to hire foreign workers at sub-par wages.
GameStop Corp. (GME)
Video game retailer GameStop announced its all-important holiday sales figure on Friday, and they weren’t good … at all. When all was said and done, during the nine weeks that essentially spanned November and December, sales fell 16.4% on a year-over-year basis. Same-store sales were off 18.7%. CEO Paul Raines explained:
“During the holiday period, sales in the video game segment were impacted by industry weakness, promotional pricing pressure and lower in-store traffic, amidst a difficult holiday season for many retailers.”
While video gaming has never been bigger, sales of consoles and game disks/cartridges continue to wane as video games are increasingly available via downloads, or played online, circumventing the need for a retailer.
In response to this ongoing trend and in the wake of a poor holiday season, GameStop lowered its fourth-quarter revenue outlook, though it didn’t alter its profit guidance for GME shares — the company still expects to post a profit of between $2.23 and $2.38 per share. Unenthused shareholders sent GME down 8% for the session.
Hovnanian Enterprises, Inc. (HOV)
Last but not least, Hovnanian Enterprises ended the day and the week and a bearish foot, with HOV losing 6.9% of its value … the second day of significant losses for the homebuilder.
JMP Securities did the deed, downgrading HOV from a “Market Perform” to “Underpeform” on Monday after the stock jumped 66% in just three months, leaving shares no room to move higher, but plenty of room to move lower. The analyst note made a point of saying the company’s 2018 expectations are too optimistic.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.