Why Whirlpool, Sherwin-Williams, and Sonic Slumped Today

By Markets Fool.com

Tuesday was a poor day for the stock market, with major market benchmarks falling around 0.3% to 0.5%. Most market commentators cited a combination of factors warranting the day's weakness, including some high-profile misses on the earnings front and rising tensions about the overall health of the U.S. economy. With investors nervously looking to the Federal Reserve in waiting for a potential decision to raise interest rates later this year, stock market valuations look high by some measures, and helped send some traders to the sidelines. In particular, some stocks fell much more sharply than the overall market, and Whirlpool (NYSE: WHR), Sherwin-Williams (NYSE: SHW), and Sonic (NASDAQ: SONC) were among the poorest performers on the day.

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Image source: Whirlpool.

Whirlpool can't get out of the drain

Whirlpool fell 11% after the appliance manufacturer reported weak results in its third-quarter financial report and reduced its earnings guidance for the full year. The company saw earnings per share rise 6% to $3.66, but investors had expected to see nearly double that rate of bottom-line growth. Despite saying that "the fundamentals of our business are strong," Whirlpool CEO Jeff Fettig made comments suggesting that the U.S. presidential election and the U.K.'s Brexit decision to leave the European Union were near-term obstacles that the company will overcome in short order. The company celebrated the fact that its market share rose despite its weakness, and efforts to adjust pricing in the U.K. to reflect currency impacts could help the stock recover from its current swoon.

Sherwin-Williams paints a less-than-perfect picture

Sherwin-Williams also dropped 11% in the wake of its third-quarter earnings report. A 4% rise in sales was roughly in line with what investors had expected from the paint giant, but a minimal increase in earnings fell short of the consensus forecast. The company's paint stores division continued to post strong results, but weakness in the consumer group as well as the global finishes and Latin America coatings divisions held back Sherwin-Williams' overall top-line performance. Of potentially more concern is the fact that some favorable conditions in the commodity markets will likely dissipate, causing Sherwin-Williams' input costs to rise and putting pressure on operating margins in the near future. A cut in guidance also spurred investors to push Sherwin-Williams' stock price lower, and it could take a stronger recovery to get the shares moving in the right direction again.

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Sonic takes a revenue hit

Finally, Sonic dropped 16%. The restaurant chain managed to boost its per-share net income by 6%, but sales performance lagged, featuring overall declines of 2% on the comparable-restaurant sales front. Company-owned stores performed especially poorly, with a 3% drop in comps compared to a 1.8% decline for same-store sales of franchise-owned locations. CEO Cliff Hudson pointed to slowing consumer trends that have hurt the company over the past six months, but he also believes that better performance from franchise locations could help boost the company's prospects in the long run. Sonic's results spurred at least one analyst downgrade, and downbeat guidance that could bring falling comparable sales and declining earnings in 2017 also didn't give investors much reason to buy shares today.

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Dan Caplinger has no position in any stocks mentioned. The Motley Fool recommends Sherwin-Williams. 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.