Tuesday was a sluggish day on Wall Street, with the Dow Jones Industrials eking out a tiny gain and most major benchmarks modestly losing ground. After a long period of near straight-up movement in the stock market, investors seemed to pause and consider the potential that the near-perfect environment they've enjoyed throughout 2017 might not turn out the way they had hoped. Questions have arisen about the viability of the current tax reform proposal, and following defeats on the healthcare front for congressional Republicans earlier in the year, market participants see the prospect for crushing gridlock that could stymie any efforts toward investor-friendly policy moves. Moreover, some individual companies suffered from bad news that cast a pall over Wall Street. Red Robin Gourmet Burgers (NASDAQ: RRGB), Priceline Group (NASDAQ: PCLN), and Avis Budget Group (NASDAQ: CAR) 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.
Red Robin gets cooked
Continue Reading Below
Shares of Red Robin Gourmet Burgers fell by nearly 30% after the high-end burger chain reported its third-quarter financial results Monday night. Red Robin said that revenue rose by just 2.3% on a 0.1% decline in comparable-restaurant sales, and adjusted earnings were down more than 40% from year-ago levels. CEO Denny Marie Post tried to build optimism by noting that the restaurant's sluggish results were better than the overall casual dining industry's performance, but investors seemed nervous about a strategic decision to stop adding new restaurants to its network after the end of 2018 to assess new approaches. The news was a crushing blow to Red Robin's positive momentum from past reports, and investors now have to question whether the restaurant industry at large will see another letdown before it can recover.
Priceline gets jet lag
Priceline Group fell stock 13.5%, losing more than $250 per share in market value in the wake of the company reporting lackluster results for the third quarter. Priceline still managed to grow its business considerably, including a 20% rise in revenue and adjusted net income that climbed by 19% from year-earlier figures. Yet those growth rates were slower than expected, as was the drop in year-over-year hotel room-night growth to below the 20% mark. With rental car and airline ticket sales seeing sequential declines at the company, investors are more nervous than ever that Priceline might have already seen its best times. Priceline often gives more pessimistic guidance about its future than actually turns out to be the case, but investors aren't taking any comfort from that prospect right now.
Avis Budget hits the brakes
Finally, shares of Avis Budget Group skidded 15%. The rental car giant reported third-quarter results that in many ways looked encouraging, including a 4% rise in revenue to set a new record. Yet the impact of hurricanes during the quarter created substantial operational disruptions to its business, and even though damage to personal vehicles led many people to rent vehicles as replacements, the net impact from the storms appeared to be negative. In response, Avis cut its guidance for the full 2017 year, pushing investors toward the lower end of its previously provided ranges. Many had seen Avis as a value play based on the idea that hurricanes would help the company rather than hurt it, but that hasn't yet proven to be the case.
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 Nov. 6, 2017.