Another day, another record. Although the market is increasingly struggling to make forward progress and hold onto those gains, it’s still making them, and nobody’s willing to test the underlying rally. By the time the closing bell rang, the S&P 500 index was at 2,474.92, down 0.24% for the session … a loss, though far from an earth-shattering one.
Indeed, that would have been a welcome outcome for owners of Avis Budget Group Inc. (NASDAQ:CAR), Plains All American Pipeline, L.P. (NYSE:PAA) and Liberty Interactive Corp (NASDAQ:QVCA) today. These three names were doomed from the start of Tuesday’s action on the heels of disastrous second-quarter reports.
Plains All American Pipeline, L.P. (PAA)
In the grand scheme of things it can’t be all that surprising. Natural gas prices have been drifting lower, and whispers of the possibility have been circulating for weeks now. There’s just something about seeing it become a reality in print, though, that takes the wind out of investors’ sails.
Long story made short, natural gas pipeline operator Plains All American Pipeline has been forced to cut its dividend, and its lowered guidance suggests things aren’t apt to improve in the foreseeable future. That was enough to send PAA to a loss of 19.4% on Tuesday.
The slightly longer version of the story: For the quarter ending in June, Plains All American Pipeline turned $6.08 billion worth of revenue into a profit of 21 cents per share. Problem is, analysts were looking for earnings of 26 cents per share of PAA stock and a top line of $6.32 billion.
The salt in the wound was news that tepid results would translate into a weaker payout. Although the company didn’t provide any details to that end, Stifel analyst Selman Akyol expects the annual payout of $2.20 per share to be pared back to only $1.80 per share of PAA.
Liberty Interactive Corp (QVCA)
PAA wasn’t the only name to be upended in response to a disappointing second quarter report. TV-shopping name Liberty Interactive Corp — which owns QVC and is endeavoring to acquire rival home shopping channel HSN, Inc. (NASDAQ:HSNI) — tanked today as well when its Q2 numbers came up short of expectations. All told, QVC’s revenue of $2 billion was down 4% year-over-year, and net income for the flagship division fell 14% to $188 million.
The results call into question how fruitful the pending acquisition of HSN might be.
Liberty Interactive recently bought online-shopping venue zulily, hoping cross-selling opportunities and the pairing of different strengths would lead to measurable growth. So far though, it hasn’t helped. Adding HSN to the mix may only further complicate things without adding any meaningful benefit.
QVCA ended the day down 9.7%.
Avis Budget Group Inc. (CAR)
Finally, shares car-rental company Avis Budget Group tumbled 9.9% today after the release of the outfit’s quarterly numbers Monday afternoon.
For the quarter ending in June, sales of $2.24 billion were a hair ahead of expectations, but a bottom line of 30 cents per share of CAR stock missed estimates of 54 cents per share by a country mile.
The advent of alternatives like Lyft and Uber are taking a toll to be sure, but with sales essentially being flat compared to year-ago levels, Avis is clearly able to sell something. The obscure headwind for the bottom line was, oddly enough, falling used car prices. Sales of its aging fleet cars are used to offset the cost of purchasing new ones, but used car prices have been dwindling well above norms for several months now.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.
