Why Rite Aid, Tailored Brands, and Chesapeake Energy Jumped Today

By Markets Fool.com


Image source: Chesapeake Energy.

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Thursday's stock market action reflected concerns about the state of the global economy, although as we've seen for months now, the declines in major market benchmarks were largely held in check by a lack of volatility. Market participants looked at the failure of the European Central Bank to take dramatic action to try to shore up Europe's economy as a sign that policymakers have limited ability to make further moves to stimulate growth. However, oil prices climbed, and that, combined with some individual company-specific news, led many stocks to post solid gains today. Among the best performers were Rite Aid (NYSE: RAD), Tailored Brands (NYSE: TLRD), and Chesapeake Energy (NYSE: CHK).

Rite Aid moves forward

Rite Aid finished 6% higher after pending acquirer Walgreens Boots Alliance (NASDAQ: WBA) provided an update on the state of its merger. The two companies remain actively engaged with Federal Trade Commission officials in reviewing the acquisition, and Walgreens said that it is actively looking at possible ways to sell off assets in order to resolve any anti-competitive issues that the FTC review has raised. In particular, Walgreens believes that it will have to sell off somewhere between 500 and 1,000 store locations.

Even with added conditions, Walgreens still thinks the merger will be completed by the end of the year, and it still expects an earnings boost in the first full year following the acquisition. Rite Aid shareholders cheered the news, but even with the day's gains, Rite Aid stock still is almost 9% below the $9-per-share offer price that Walgreens will pay.

Tailored Brands finds a good fit with its earnings

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Tailored Brands soared 16% in the wake of strong results in its second-quarter financial report. The company behind Men's Wearhouse and Jos. A. Bank said that sales fell 1.1%, to $909.7 million, but adjusted earnings of $0.99 per share were $0.06 higher than the consensus forecast among investors. In particular, comparable-store sales for the Men's Wearhouse segment were up 2.9%, and although Jos. A. Bank took a 16.3% hit to comps, company executives were prepared for that disparity as part of its broader transition plan for the discount brand.

Investors were also pleased that Tailored Brands reiterated its full-year guidance, and the company expects overall gains in comps by the end of the fiscal year. Although its efforts have been substantial, Tailored Brands thinks it's on the right track, and investors agreed today.

Chesapeake rides energy higher

Finally, Chesapeake Energy jumped 14%. Today was a strong day for the energy markets, with oil prices climbing almost $2 per barrel to move above $47. A large drawdown in stockpiles of crude helped spur the price gains, and natural gas stockpiles also climbed less than expected, pushing prices higher.

Favorable market movements are helpful for Chesapeake, which has taken dramatic action recently to get its capital structure into better shape for the future. If energy markets cooperate further, then Chesapeake investors could finally get the share-price recovery that they've waited so long to see.

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Dan Caplinger has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. 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.