Wall Street had a mixed performance on Thursday, with major benchmarks finding themselves pulled in different directions due to countervailing factors. On one hand, trade policy remains an important unresolved issue, with the threat of escalating tensions with key trading partners like China making investors in some export-driven companies nervous. At the same time, geopolitical wrangling between the U.S. and North Korea has also kept market participants on their toes. Adding to the uncertainty was bad news for several key stocks. Enbridge Energy Partners (NYSE: EEP), Del Taco Restaurants (NASDAQ: TACO), and J.Jill (NYSE: JILL) were among the worst performers on the day. Here's why they did so poorly.
FERC decision hits Enbridge, MLPs
Units of Enbridge Energy Partners dropped 17%, as it is one of many master limited partnerships in the energy industry being negatively affected by a decision from the Federal Energy Regulatory Commission. FERC said that in setting rates for pipeline transmission, it would no longer allow MLPs to recover amounts for income tax liability as part of their calculations of total cost of service. Proponents of the move argue that old rules implicitly allowed a double recovery of income tax costs, but those opposing the measure point to years of precedent in maintaining the favorable provision. The move could spur Enbridge and other MLPs to consider changes to corporate structures, and MLPs will have a couple of years to figure things out before the rule goes into effect in 2020.
Del Taco looks less appetizing
Del Taco Restaurants stock fell 11% after the fast-food restaurant chain reported its fourth-quarter financial results. The company said that comparable-store sales across its network were higher by 2.4%, with only slight underperformance among its company-owned stores. Yet investors didn't seem satisfied by guidance for comps to grow just 2% to 4% in 2018, and earnings projections were a bit weaker than the consensus forecast among those following the stock. As Del Taco embarks on a series of initiatives designed to try to improve the value of its brand, shareholders need to focus on whether the chain can succeed despite what has remained a difficult environment for the restaurant industry as a whole.
J.Jill falls off the hill -- hard
Finally, shares of J.Jill plunged 35%. The apparel retailer's fourth-quarter financial report included solid results for the holiday season, including a 13% rise in revenue and a boost of more than 60% in earnings per share that was in part due to an additional week in the quarter. Yet what shook shareholders was guidance for the current quarter, which included calls for a mid-single-digit percentage drop in comparable-store sales and weaker earnings than investors had expected. CEO Paula Bennett also said that she will retire as of April 16, and even though board member Linda Heasley will take Bennett's place, the leadership transition comes at an already challenging time for J.Jill and the retail industry more broadly.
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