Why Smith & Wesson Holding, Natus Medical, and Petroleo Brasileiro Slumped Today

Image: Smith & Wesson.

The stock market got off to an unfortunate start on Monday, sending the Dow and S&P 500 down by about 0.3% to begin the week. After the strength of the market's rally in March, a minor pullback isn't anything to get too concerned about, but concerns about how well first-quarter earnings will come in have some investors preparing themselves for another bout of market volatility. Weakness in the energy and commodities markets also weighed on sentiment. Even though the overall market's decline was modest, some stocks posted substantial declines, and Smith & Wesson Holding , Natus Medical , and Petroleo Brasileiro were some of the worst performers on the day.

Smith & Wesson plunged 18% in the wake of negative data concerning the number of background checks conducted for potential gun purchases. The National Instant Criminal Background-Check System reported a 13% drop in handgun-related checks in March compared to February, and that prompted some analysts to recommend taking profits off the table after the gun-maker's more than 50% rise since early December. There are reasonable rationales for Smith & Wesson to decline, including the ever-present risk of tighter gun-control legislation. Yet over the long run, the company has managed to defy bearish calls linked to regulation, and many shareholders believe that today's drop was a massive overreaction that could merely create another buying opportunity for those wanting to get exposure to the lucrative market.

Natus Medical dropped 20% after announcing its preliminary revenue figures for the first quarter. The company said that it would fall short of its original guidance for the quarter, with sales coming in at around $87.5 million. That's $4 million to $5 million less than Natus Medical had originally expected, and CEO Jim Hawkins blamed the shortfall on "pushouts of key orders in both our international and domestic markets." In addition, Natus didn't get its typical contribution toward revenue from the Venezuelan Ministry of Health because of a lack of prepayment activity during the quarter. Natus didn't offer a view on its earnings, and investors expect a slight uptick in earnings compared to the year-ago quarter. If that doesn't materialize, then Natus could fall even further.

Finally, Petrobras fell 10%. The Brazilian oil giant has struggled during the plunge in crude oil prices over the past year, and concerns about scandals allegedly involving high-ranking officials in the Brazilian government have also weighed on Petrobras shares. Most recently, speculation that the company might lower fuel costs led some to conclude that Brazilian president Dilma Rousseff might be making a last-gasp effort to gain popularity or could be preparing to leave office entirely if current impeachment proceedings make further progress. Investors in Petrobras need to understand that the structure of the state-run company makes it difficult to count on normal profit-maximizing behavior, and that's especially true with the political system in Brazil in an unusually dire state of flux.

The article Why Smith & Wesson Holding, Natus Medical, and Petroleo Brasileiro Slumped Today originally appeared on Fool.com.

Dan Caplinger has no position in any stocks mentioned. The Motley Fool recommends Natus Medical. 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.