Motley Fool
0
All posts from Motley Fool
Motley Fool in Motley Fool,

Why Seagate Technology, Interpublic Group, and Community Health Systems Slumped Today

Wall Street was in a celebratory mood on Tuesday, with gains throughout many key financial markets. Climbing stock prices came in part as a result of a rebound in commodities like oil and base metals, and an overall positive trend among companies reporting earnings today supported investors' generally upbeat view of the economy. Yet even though the mood was mostly positive, some companies missed out on the rally and reported bad news that sent their shares lower. Seagate Technology (NASDAQ: STX), Interpublic Group (NYSE: IPG), and Community Health Systems (NYSE: CYH) 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.

Seagate looks for a new leader after poor results

Shares of Seagate plunged 16.5% after the company reported fiscal fourth-quarter financial results and announced a leadership transition. The data storage specialist said that revenue fell more than 9% from the year-ago quarter, dramatically underperforming the smaller drop that most investors had expected, and adjusted earnings came in about a third less than the consensus forecast among those following the stock. Seagate also said that CEO Steve Luczo will leave his role at the end of September, giving way to current COO Dave Mosley and taking on the role of executive chairman of Seagate's board. With the move, Mosley said he hopes to "lead Seagate into the next era of leadership in the storage technology market," but investors didn't seem so upbeat about the company's prospects in light of recent trends.

Image source: Seagate Technology.

Interpublic blames Washington for its struggles

Interpublic Group stock fell nearly 13.5% in the wake of the company's second-quarter financial report. The advertising company said that revenue was down almost 2% from the year-ago quarter. Net income was down even more sharply, plunging nearly 40% on a reported basis and sending adjusted earnings per share down by nearly a fifth to $0.27 per share. CEO Michael Roth said during the conference call that "our results in the quarter reflect the fact that macro uncertainty and political gridlock are affecting spend, particularly in the U.S., with clients demonstrating caution in terms of releasing budgets." Interpublic will try to have greater cost controls to support profits, but investors aren't optimistic that blaming Washington will lead to a turnaround anytime soon.

Community Health looks for a cure

Finally, shares of Community Health Systems finished down 10%. The hospital operator reacted negatively to earnings news from industry peer HCA Healthcare, which said that lower patient volumes and higher expenses led it to miss its profit expectations in its second-quarter financial report. HCA also reduced its profit guidance for the full 2017 year, and Community Health investors extrapolated that the entire hospital industry would likely see similar fallout. Even with efforts to repeal the Affordable Care Act and replace it with legislation that might be less favorable to Community Health struggling in the Senate, most investors expect healthcare reform to come at some point, and the prospects could be less favorable for hospital operators than the current legislation.

Offer from The Motley Fool: The 10 best stocks to buy now
Motley 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.

Click here to get access to the full list!

*Stock Advisor returns as of July 6, 2017.

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.