The stock market wasn't able to sustain its record-setting streak of winning days on Thursday, as most major benchmarks took a break from their recent rises. Relatively little news moved the market as a whole, as general sentiment among investors remained positive as markets wait to see how new policies from Washington will actually have an impact on various industries. Yet earnings season continued to move forward, and although overall results were mixed, some stocks suffered significant declines as a result of news items. Among the worst performers were Avon Products (NYSE: AVP), Molina Healthcare (NYSE: MOH), and MGM Resorts (NYSE: MGM). Below, we'll look more closely at these stocks to tell you why they did so poorly.
Continue Reading Below
Avon isn't calling
Shares of Avon Products plunged 19% after the company reported its fourth-quarter and full-year 2016 financial results, which included a 7% decline in full-year revenue and adjusted earnings of just $0.04 per share for the year. Foreign currency impacts played a big role in holding the beauty products specialist back, as the company said that sales would have risen 2% in constant currency terms and that the dollar's strength subtracted $0.28 per share from Avon's annual earnings. Yet Avon saw the number of active representatives it has in its network fall 1%, with considerable weakness in the Asia-Pacific segment, and the U.K. and Mexico were other notable areas of poor performance for the company. Avon highlighted the fact that it remains in the middle of a three-year plan to transform itself into a more successful business through growth initiatives, cost-control measures, and financial strength, but investors weren't satisfied with the beauty company's progress to date.
Image source: Avon Products.
Molina blames Obamacare for a tough quarter
Molina Healthcare stock dropped 18% in the wake of the company's fourth-quarter and full-year 2016 report. The health insurance company said that adjusted net income for the year fell by more than 80% to just $0.50 per share, saying that the decrease came primarily from poor profitability in its Affordable Care Act marketplace program. More specifically, Molina said that it lost about $120 million pre-tax from its Obamacare offerings, with higher risk transfer payments offsetting lower-than-expected medical costs from the program. Going forward, Molina vowed to stabilize its marketplace performance, improve its Medicaid results in three key states, and keep building up its opportunity in the Puerto Rican market. However, investors still fear potential fallout from decisions related to the program, and until it can navigate those difficult waters more effectively, Molina could remain under pressure.
MGM rolls snake eyes
Finally, shares of MGM Resorts finished down 9%. The casino and resort company said that net revenue at its U.S. resorts climbed 17% in the fourth quarter from year-ago levels, due largely to contributions from the Borgata and MGM National Harbor properties, with casino-related revenue in particular showing strong growth of about a third. Yet even though MGM has largely managed to sidestep the weakness in the Asian gaming capital of Macau, which hit a number of its rivals much harder, subpar performance domestically stemmed from a lower number of convention events due to calendar effects. Going forward, MGM needs to demonstrate that its emphasis on the Las Vegas market is well-founded, and if it can't produce better results close to home, then MGM could see further pressure on its stock price in the near future.
Offer from The Motley Fool: The 10 best stocks to buy nowMotley Fool co-founders Tom and David Gardner have spent more than a decade beating the market. In fact, the newsletter they run, Motley Fool Stock Advisor, has tripled the S&P 500!*
Tom and David just revealed their ten top stock picks for investors to buy right now.
*Stock Advisor returns as of 1/30/2017