Why AeroVironment, NCI Building Systems, and H&R Block Slumped Today

By Markets Fool.com


Image source: H&R Block.

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The stock market eased downward on Wednesday, finishing the month of August with modest declines for major market benchmarks like the Dow Jones Industrials and S&P 500. A plunge in oil prices below the $45 per barrel mark was primarily responsible for the day's poor market sentiment and resulting drop in the indexes, and investors weren't certain whether a complete lack of inflationary pressure might lead the Federal Reserve to slow its plans to boost interest rates or simply stiffen its resolve to move forward with normalizing rates to reflect a steadily improving economy. The Dow and S&P were down roughly a quarter to a third of a percentage point, but some stocks took much greater damage. Among them were AeroVironment (NASDAQ: AVAV), NCI Building Systems (NYSE: NCS), and H&R Block (NYSE: HRB).

AeroVironment misses the runway

AeroVironment plunged 17% after the maker of unmanned aircraft systems reported disappointing results for its fiscal first quarter. Revenue dropped more than 20%, and the company's drone segment suffered even greater declines in its top line. AeroVironment lost more money than investors had anticipated, widening its year-ago loss, and investors weren't pleased with the fact that the company will likely have to work extremely hard just to achieve its previous guidance. Given how much potential the drone market has, high hopes among AeroVironment shareholders haven't come close to panning out. If the company doesn't start showing more success in pushing forward in the fast-moving industry, then it might miss out for good and create new challenges for its long-term strategy.

NCI falls despite solid quarterly growth

NCI Building Systems saw its stock drop 15% despite reporting fiscal third-quarter results that were greater than most investors had expected to see. The manufacturer of metal products for the commercial building industry reported revenue that grew 10%, and NCI said that tonnage volume climbed at an even faster rate of nearly 12%. Net income more than tripled from year-ago figures, and adjusted net income of $0.33 per share was $0.04 ahead of the consensus estimate among investors. However, NCI suggested that some of its positive momentum might dissipate in the coming months, saying that it expects that sequential increases in the fiscal fourth quarter would be "somewhat muted" even when considering the typical seasonality in the industry. Even with the drop, NCI stock is still up by more than two-thirds from its lows early in 2016.

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H&R Block files a bad return

Finally, H&R Block fell 11%. The tax-preparation service provider reported its fiscal first-quarter results, and although losses after the end of tax season aren't unusual, the year-over-year drop of almost 10% was disconcerting to those hoping for greater growth from the company. H&R Block reported a much wider loss of $0.55 per share, and even though the company said that a reduction in share count was responsible for about half of the increase, sluggish fundamentals in the underlying business were also partially to blame. With rising concerns about H&R Block's ability to control costs, much will depend on whether the results of the 2016 Presidential election point toward changes in tax laws that could either complicate or simplify tax return preparation in the years to come.

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