Why Brinker International, Michaels Companies, and Hawaiian Holdings Slumped Today

By Dan Caplinger Markets Fool.com

The Dow finally surpassed the 20,000 mark on Wednesday, riding a wave of enthusiasm from investors. Perceived pro-growth initiatives from the federal government and strong results on the earnings front were enough to send the Dow up more than 155 points, and major market benchmarks all moved up almost 1% on the day. Yet some stocks still missed out on the rally, and Brinker International (NYSE: EAT), Michaels Companies (NASDAQ: MIK), and Hawaiian Holdings (NASDAQ: HA) were among the worst performers of the day. Below, we'll look more closely at these stocks to tell you why they did so poorly.

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Image source: Brinker International.

Brinker leaves investors hungry for more

Brinker International fell 6% after the operator of Chili's and Maggiano's restaurants reported its fiscal second-quarter results. Total revenue fell 2.2%, and comparable restaurant sales at Chili's fell between 3.3% and 3.5%, while Maggiano's saw comps fall 0.8%. Declines in operating margin also weighed on earnings, which fell 9% from year-ago levels to $0.71 per share. As CEO Wyman Roberts said, "We are not satisfied with our second quarter results," citing "a much weaker-than-expected casual dining category" in explaining the poor performance. Despite having confidence in its long-term prospects, Brinker adjusted its guidance, expecting total sales to fall 2% to 2.5% on a 1.5% to 2% drop in comps, with full-year earnings coming in between $3.05 and $3.15 per share. That's considerably worse than the $3.36 per share consensus forecast among investors, and that explains the magnitude of the decline.

Michaels warns in advance of secondary offering

Michaels Companies declined 7% in the wake of a dual announcement. The retailer said major investors would sell 18 million shares of common stock through a secondary offering, with Michaels itself picking up 8 million of those shares through a stock repurchase agreement. Yet in addition to the perceived lack of confidence among key investors, Michaels also gave preliminary figures for its fourth quarter, which included comparable-store sales declines of between 0.9% and 1.5%, and earnings of $0.94 to $0.95 per share. Those figures are slightly less than most investors had expected, and the decision among major shareholders to do this offering when the stock is near its lowest levels since late 2014 raises questions about Michaels' near-term future.

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Hawaiian flies lower

Finally, Hawaiian Holdings declined 6%. The owner of Hawaiian Airlines reported fourth-quarter and full-year results Tuesday night, including a better than 40% rise in adjusted earnings and vast improvement in adjusted pre-tax margin. The company has worked well operationally, achieving a top rank globally for on-time performance in 2016 and strong results in monthly figures throughout the year. Yet even that growth rate wasn't enough to satisfy investor expectations, and costs appear likely to start climbing into 2017. Even with a slight miss on the earnings front, things continue to look good for Hawaiian as it aims to take full advantage of rosier economic projections across the nation.

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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. The Motley Fool has a disclosure policy.