Why Southwestern Energy, Zoe's Kitchen, and Hewlett Packard Enterprise Slumped Today
All good things must come to an end, and for all but the last 10 minutes ofFriday's market, it looked like today would be the day thatthe Dow Jones Industrials would finally break its streak of record highs. Yet a last-minute boost sent all three major market benchmarks into the black, and in the absence of news moving the market to finish the week, positive market sentiment was enough to keep stocks climbing. Yet some stocks still posted dramatic declines, and Southwestern Energy (NYSE: SWN), Zoe's Kitchen (NYSE: ZOES), and Hewlett Packard Enterprise (NYSE: HPE) 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.
Southwestern loses momentum
Southwestern Energy shares dropped 12% after the company reported a loss in its fourth-quarter results. The natural gas company said that it lost $237 million during the quarter, but after making certain modifications, adjusted earnings of $0.08 per share reversed a year-ago loss. However, production was down by nearly a fifth to 202 billion cubic feet, and even a rise in average realized prices for natural gas, gas liquids, and oil wasn't enough to satisfy investors in Southwestern Energy. Nevertheless, CEO Bill Way is convinced that the moves Southwestern made to extend its debt maturities, reduce what it owes, and cut costs should pay off whenever the energy markets give investors a more sustained recovery. Yet until those prices rebound, falling reserves could prove to be problematic for Southwestern Energy in the near term.
Image source: Southwestern Energy.
Zoe's leaves investors hungry
Zoe's Kitchen stock dropped 15% in the wake of the company's fourth-quarter financial results. The restaurant operator said that sales climbed 18%, but comparable-restaurant sales were only up 0.7%. The company posted a loss of $500,000, and adjusted net loss of $0.07 per share was worse than last year's quarter, as well as what investors had expected to see. CEO Kevin Miles pointed to better full-year results and noted that Zoe's expects to see a stronger second half of 2017, when it expects that online ordering, full implementation of its mobile app, and small-order delivery will make the Mediterranean specialist more accessible to its patrons. Yet Zoe's outlook for comparable sales growth of 1% to 2% in fiscal 2017 and revenue of $325 million to $327 million wasn't very satisfying for growth-minded investors, and an extremely competitive environment in the restaurant industry will likely keep taking its toll on Zoe's results for the foreseeable future.
HP Enterprise reduces its guidance
Finally, Hewlett Packard Enterprise fell 8%. The tech giant posted a 10% drop in revenue compared to year-ago results, but adjusted earnings per share were up nearly 10%. However, the company had to cut its guidance for the full 2017 fiscal year, identifying adverse foreign exchange movements, higher commodities pricing, and some problems with its internal execution for holding HP Enterprise back. CEO Meg Whitman urged investors to keep their eyes on the company's strategic vision, noting that "the steps we're taking to strengthen our portfolio, streamline our organization, and build the right leadership team are setting us up to win long into the future." Nevertheless, the $0.12-per-share reduction in its bottom line sent HP Enterprise investors toward the exits, and the company will have to face up to rising competition in order to stake its claim to its share of a growing market.
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Dan Caplinger has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Zoe's Kitchen. The Motley Fool has a disclosure policy.