With some time to think about the Federal Reserve’s rate hike and associated rhetoric on Wednesday, in addition to a lethargic industrial productivity report for May, doubt was allowed to creep back into the back of investors’ minds and undo yesterday’s bullishness. By the time Thursday’s closing bell rang, the S&P 500 was down 0.22% to end the session at 2,432.46.
That was nothing compared to the drubbings suffered by Brinker International, Inc. (NYSE:EAT), Snap Inc (NYSE:SNAP) and Kroger Co (NYSE:KR) on Thursday, however. These three names even managed to underperform the FAANG stocks, which have been clear laggards on their own this week.
Kroger Co (KR)
One would think a grocery stock like Kroger would be a picture of stability, in that food prices rise and fall relatively slowly, and consumers never stop eating. One would be wrong to make such an assumption, however … at least in this case. KR shares fell a stunning 18.8% on Thursday after the company reported disappointing first-quarter results and cautioned things weren’t looking any better for the foreseeable future.
For the quarter ending in late-May, the grocer beefed up its top line to $36.3 billion, up 4.9% on a year-over-year basis. Earnings, however, fell from 72 cents per share of KR a year earlier to only 32 cents per share last quarter. Steep price cuts were cited as the reason, as the company sought to remain price-competitive with rivals.
That price war forced Kroger to rethink its full-year guidance as well. The prior profit outlook of between $2.21 and $2.25 per share has been pared back to a range of only $2 to $2.05.
Snap Inc (SNAP)
Don’t look for a specific reason Snapchat parent company Snap saw its stock lose another 5% of its value today. It has been in a bigger-picture downtrend since peaking on Mar. 3, and today’s loss was just an extension of what has now become a two-week rout. Just know that thanks to today’s weakness, Snap shares are hovering right around their March IPO price of $17. A lot of people could be about to throw in the towel and really accelerate the selling effort.
That being said, if today’s SNAP selloff had to be attributed to news, The Motley Fool’s Evan Niu’s take on the company is the most likely culprit. Nui plainly pointed out that only 7% of advertisers used the platform to promote their clients last quarter. Considering all the hype Snapchat has mustered, one would hope for more interest on the part of the organizations that supply its revenue.
Brinker International, Inc. (EAT)
Last but not least, restaurant chain Brinker International — the parent company of Chili’s — was downgraded by JPMorgan today, with the bank’s research arm expressing concern that the organization has spent too much money for too little of a return, and is now low on much-needed cash. JPMorgan lowered its stance on EAT from “Overweight” to “Neutral,” and presently sports a price target of $44.
That was enough to send the stock south to the tune of 9.7%.
Until last quarter, Brinker has managed to cultivate some sales growth. Last quarter’s top and bottom lines were down on a year-over-year basis though. That headwind was already largely priced into the stock, but after today’s news EAT was sent to new 52-week lows.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.