Why Red Hat, Winnebago Industries, and Clean Energy Fuels Slumped Today

By Dan Caplinger Markets Fool.com

The stock market slipped slightly on Thursday, once again failing to give investors the Dow 20,000 victory that they had hoped to see. Major market benchmarks were down as much as half a percent as investors appeared reluctant to push the market any further upward after a huge rally that has taken the Dow up more than 2,000 points since early November.

Continue Reading Below

Moreover, some companies gave investors bad news that led to much larger declines in their share prices than the general market suffered. Red Hat (NYSE: RHT), Winnebago Industries (NYSE: WGO), and Clean Energy Fuels (NASDAQ: CLNE) were among the worst performers on the day. Below, we'll look more closely at these stocks to tell you why they did so poorly.


Image source: Winnebago.

Red Hat looks blue

Red Hat fell 14% after the open-source software maker released its fiscal third-quarter financial results late Wednesday. The company continued to generate solid growth, with revenue climbing 18%, sending adjusted earnings up 27% from year-ago levels. But investors had hoped to see even better sales gains, and although the company said that some of its revenue losses were simply delays that were tied to the presidential election, investors seemed troubled by the news that CFO Frank Calderoni would leave Red Hat to head another company.

More broadly, a tepid outlook for the current quarter led some market commentators to fear that the cloud-computing trend could be hurting Red Hat's prospects. Given the need for the company to keep growing quickly, Red Hat needs to demonstrate to investors soon that it will be able to bounce back from perceived sluggishness.

Continue Reading Below

Winnebago gets a flat

Winnebago Industries dropped another 8% Thursday, adding to losses from the previous day's session. The RV manufacturer reported its fiscal first-quarter results Wednesday morning, which included better revenue and earnings than investors had expected. In fact, sales growth was at roughly double the pace of the consensus forecast among those following the stock, and net income was up by more than a third compared to the year-earlier quarter.

Yet after an initial pop higher, shares reversed course Wednesday as investors apparently decided that the stock had come too far too quickly, and that downward trend continued Thursday. Yet even with the declines, Winnebago shares have still jumped by more than two-thirds since the beginning of the year.

Clean Energy pays down debt

Finally, Clean Energy Fuels dropped 10%. The natural-gas fueling network provider made a filing with the U.S. Securities and Exchange Commission that informed investors that the company had bought back $50 million in face value of its outstanding convertible senior notes due next year. The company repurchased the debt at a discount, paying just $42.75 million and doubling the amount it has spent retiring debt so far in 2016.

In addition, Clean Energy reminded investors that it had issued more than 6.26 million shares of common stock in order to retire $25 million in notes earlier in the year. Ordinarily, a cleaner balance sheet would be good news, but investors appear more worried about whether the company can get its fundamental business in order so that it can stop worrying so much about its outstanding debt.

10 stocks we like better than Winnebago Industries
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*

David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and Winnebago Industries wasn't one of them! That's right -- they think these 10 stocks are even better buys.

Click here to learn about these picks!

*Stock Advisor returns as of Nov. 7, 2016

Dan Caplinger has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Clean Energy Fuels. 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.