Why Lumber Liquidators, Sysco, and Dean Foods Slumped Today

By Markets Fool.com


Image: Sysco.

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Monday brought a continuation of last week's stock market gains to Wall Street, and much of the gains were concentrated in previously hard-hit areas of the market, such as materials and energy. Major market benchmarks were up about 1.5% on the day. Crude oil prices jumped above the $33 per-barrel mark, and key commodity prices like copper surged higher, as well, on support from energy and from the Chinese stock market.

Yet even though many stocks in the energy and materials sectors climbed substantially, others outside those areas were mixed. Among the poorer losers on Monday were Lumber Liquidators , Sysco , and Dean Foods .

Lumber Liquidators plunged 20%. The flooring specialist fell after the Centers for Disease Control released information in a report saying that it had previously underestimated the exposure to formaldehyde from certain types of laminate flooring that the company produced. The CDC upped its estimate of cancer incidence from a range of two to nine per 100,000 to a higher range of six to 30 per 100,000.

For its part, Lumber Liquidators said that the CDC overestimates the health risk from its laminate flooring products, and that it looks forward to the agency's review of its work. Nevertheless, the issue continues to attract negative attention for the company, and with added health risks like asthma and other respiratory problems, Lumber Liquidators could take a while to recover from this episode.

Sysco dropped 5% after announcing that it would acquire U.K. food services and distribution company Brakes Group for $3.1 billion. Sysco argued that the deal will expand the company's presence within the U.K. and Ireland, as well as the European continent, and it expects that further moves to grow its overall footprint will follow in the future.

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CEO Bill DeLaney said that it expects "to experience little distraction from integration given the minimal overlap of the businesses," but he also pointed to the value of establishing more extensive business operations in the European region to serve as a base of operations for expansion down the road. With rival U.S. Foods likely looking to seek capital in an IPO in the near future, Sysco hopes to cement its grip over the food-services industry both in the U.S., and abroad.

Finally, elsewhere in the food arena, dairy giant Dean Foods fell 8% in the wake of its fourth-quarter financial report. The company said that adjusted net income nearly quintupled, to $33 million, producing adjusted earnings of $0.36 per share. That topped expectations, and initially caused Dean Foods' stock to climb; but later reflection among investors seemed to focus on a shortfall in revenue, and on the deteriorating state of the U.S. milk market.

Dean Foods said that total fluid milk volumes domestically fell 1.1% during the quarter, and the company's market share of the market fell by nearly a full percentage point compared to the previous year, to 34.7%. Expectations for further declines in volume during the current quarter outweighed a more upbeat outlook for the remainder of 2016, but the company's results weren't nearly as one-sidedly negative as the stock move suggests.

The article Why Lumber Liquidators, Sysco, and Dean Foods Slumped Today originally appeared on Fool.com.

Dan Caplinger has no position in any stocks mentioned. The Motley Fool recommends Lumber Liquidators. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.