It was another sour day for stocks … initially anyway, in response to a disappointing consumer confidence reading for January. When all was said and done though, investors figured things weren’t all bad. The S&P 500‘s close 2,278.87, down 0.09% from Monday’s last trade.
Leading the marketwide bearish charge were United Parcel Service, Inc. (NYSE:UPS), Teva Pharmaceutical Industries Ltd (ADR) (NYSE:TEVA) and Under Armour Inc (NYSE:UA, NYSE:UAA). Here’s what went wrong for each.
Under Armour Inc (UAA)
Once one of the market’s darlings, the fall from grace Under Armour has suffered since September of 2015 turned downright painful today. Already down more than 40% from late-2015 as of yesterday, UAA plunged 25.7% today in response to the athleticwear maker’s fourth-quarter report.
For the three-month period ending in December, Under Armour earned 23 cents per share on sales of $1.3 billion. The top line was up 12% from the revenue of $1.17 billion generated in the same quarter a year earlier, but profit per share of UAA were a penny lower than the year-ago earnings figure of 24 cents. The bulk of the setback for the stock, however, largely stemmed from missing estimates for earnings of 25 cents and revenue of $1.41 billion.
Under Armour’s previously strong growth rate of 20% or more has been waning for a few quarters now, and it won’t likely get better anytime soon. For the current year, the company told UAA shareholders to look for a top line of around $5.4 billion, up only between 11% and 12%. Analysts had been modeling revenue of $6.06 billion.
United Parcel Service, Inc. (UPS)
UAA wasn’t the only stock to be up-ended by a poor earnings report on Tuesday. United Parcel Service also took a hit following news that the delivery outfit’s fourth quarter profit fell short of estimates. The pros were calling for earnings of $1.69 per share, but UPS only produced $1.63 per share. Revenue of $16.93 billion also missed estimates of $16.99 billion.
UPS has plenty of business, but it’s not prepared for what has been a surprisingly rapid rise in the number of consumer/home deliveries it’s now handling. Fueled by the ongoing advent of online shopping, 55% of the fourth quarter’s deliveries were made to residences; 63% of December’s deliveries were home deliveries. Both figures were records, but residential deliveries aren’t as cost-effective for United Parcel Service.
For the current year, UPS believes it will earn between $5.80 and $6.10 per share, versus estimates of $6.15.
UPS ended the day down 6.7%.
Teva Pharmaceutical Industries Ltd (ADR) (TEVA)
Last but not least, what was good for Mylan Pharmaceuticals on Tuesday was bad for Teva Pharmaceutical Industries, sending TEVA shares lower to the tune of 3.2%.
The selloff was spurred by a court decision regarding multiple sclerosis drug Copaxone. Teva was arguing that Mylan infringed on one of its patents, but the U.S. District Court Of Delaware disagreed. It’s a problem, as Copaxone accounts for one-fifth of Teva’s revenue, and more than 40% of its profits.
Teva Pharmaceutical Industries says it will appeal the ruling.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.
