In this article, we will take a look at the 10 biggest losers this week.
U.S. stocks struggled to inch higher during the last trading day of September. All three key indices remained mostly in the red throughout the week, primarily due to recent rate hikes by the Fed.
Meanwhile, footwear and apparel retailers, including NIKE, Inc. (NYSE:NKE) and V.F. Corporation (NYSE:VFC), also lost significant value this week following their cautious commentary on weakening demand and elevated inventory levels.
In addition, shares of CarMax, Inc. (NYSE:KMX), Peloton Interactive, Inc. (NASDAQ:PTON) and Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM), also traded mostly lower in recent days. Check out the complete article below to see what brought these companies on the list of 10 biggest losers this week.
10. Worthington Industries, Inc. (NYSE:WOR)
Number of Hedge Fund Holders: 14
Shares of Worthington Industries, Inc. (NYSE:WOR) fell over 16 percent this week, and much of that drop is attributed to its recent quarterly report. The metals manufacturing company posted adjusted earnings of $1.61 per share for its fiscal first quarter, well below $2.46 per share in the corresponding period of 2021.
In addition, Worthington Industries, Inc. (NYSE:WOR) posted revenue of $1.4 billion versus $1.1 billion in the same quarter last year. Analysts were looking for earnings of $1.58 per share on revenue of $1.23 billion.
Subsequently, BMO Capital cut its price target for Worthington Industries, Inc. (NYSE:WOR) following its latest earnings report. The research firm trimmed its price target for the Ohio-based company from $58 per share to $52 per share on Friday, September 30. Analyst Katja Jancic pointed towards near-term challenges due to a sharp decline in steel prices.
9. Rite Aid Corporation (NYSE:RAD)
Number of Hedge Fund Holders: 16
Shares of Rite Aid Corporation (NYSE:RAD) lost more than 30 percent of their value this week. The drop came after the drugstore chain posted a wider-than-expected loss for its fiscal second quarter amid weak demand for coronavirus vaccines and testing.
Rite Aid Corporation (NYSE:RAD) posted an adjusted loss of 63 cents per share, while analysts were looking for a loss of 55 cents. Its quarterly revenue for the quarter also slipped 3.5 percent versus last year to $5.90 billion but exceeded the expectations of $5.77 billion.
Moving forward, Rite Aid Corporation (NYSE:RAD) trimmed its fiscal 2023 adjusted EBITDA outlook to a range of $450 – $490 million, from its earlier guidance between $460 – $500 million.
8. Rent-A-Center, Inc. (NASDAQ:RCII)
Number of Hedge Fund Holders: 23
Shares of Rent-A-Center, Inc. (NASDAQ:RCII) plummeted nearly 20 percent this week, largely due to its revised guidance for the third quarter. The rent-to-own company now expects adjusted earnings in the range of 85 – 95 cents, down from its previous guidance between $1.05 – $1.25 per share.
In addition, Rent-A-Center, Inc. (NASDAQ:RCII) projected revenue of $1 – $1.02 billion for Q3 versus its earlier outlook of $1 – $1.06 billion. The updated guidance is below analysts’ average estimate of $1.14 per share for earnings and $1.03 billion for revenue.
Discussing the outlook, CEO of Rent-A-Center, Inc. (NASDAQ:RCII), Mitch Fadel, said in a statement:
“External economic conditions have continued to deteriorate over the past few months. This has affected both retail traffic and customer payment behavior, so we are updating third quarter guidance to reflect the impact of those trends on our business.”
7. Carnival Corporation & plc (NYSE:CCL)
Number of Hedge Fund Holders: 24
Shares of Carnival Corporation & plc (NYSE:CCL) plunged to a new low this week after announcing weak financial results for its fiscal third quarter. The British-American cruise operator faced difficulties during the quarter as customers limited their spending on leisure activities due to record inflation.
Carnival Corporation & plc (NYSE:CCL) reported a loss of 65 cents per share on revenue of $4.31 billion for its fiscal Q3. The results missed Wall Street expectations. Looking forward, Carnival Corporation & plc (NYSE:CCL) expects its fiscal Q4 adjusted EBITDA in the range of breakeven to marginally negative.
Like Carnival Corporation & plc (NYSE:CCL), NIKE, Inc. (NYSE:NKE), V.F. Corporation (NYSE:VFC) and CarMax, Inc. (NYSE:KMX) are also on the list of 10 biggest losers this week.
6. NIO Inc. (NYSE:NIO)
Number of Hedge Fund Holders: 25
Shares of NIO Inc. (NYSE:NIO) lost nearly 10 percent of their value this week. Some are attributing the drop to the elevated geopolitical tensions, while others are linking it to the company’s recent warning about a slow-than-expected European expansion.
NIO Inc. (NYSE:NIO) shares are already down more than 50 percent on a year-to-date basis. Earlier this month, the Chinese electric vehicle giant posted a wider-than-expected loss for the second quarter.
The company reported an adjusted loss of 20 cents per share, while analysts were looking for a loss of 17 cents. Its gross margin for the quarter also dropped to 13 percent, from 18.6 percent in the corresponding period of 2021. On the bright side, NIO Inc. (NYSE:NIO) generated sales of $1.54 billion, beating the consensus of $1.43 billion.
5. CarMax, Inc. (NYSE:KMX)
Number of Hedge Fund Holders: 28
Shares of CarMax, Inc. (NYSE:KMX) plummeted nearly 16 percent this week after the used vehicle retailer announced disappointing financial results for its fiscal second quarter. The company blamed elevated inflation and higher interest rates for the weakness.
CarMax, Inc. (NYSE:KMX) earned 79 cents per share for the quarter, significantly lower than $1.72 per share in the year-ago period. Revenue came in at $8.1 billion, marginally higher than $8 billion in the same period of 2021. The results were well below the consensus of $1.39 per share for earnings and $8.5 billion for revenue.
Speaking on the results, CEO of CarMax, Inc. (NYSE:KMX), Bill Nash, said:
“While this was a challenging quarter across the used car industry, our ongoing progress in strengthening and expanding our omnichannel experience continues to positively differentiate us and enable us to grow market share.”
4. V.F. Corporation (NYSE:VFC)
Number of Hedge Fund Holders: 29
Shares of V.F. Corporation (NYSE:VFC) declined more than 15 percent this week after cutting its outlook for the full year. The apparel and footwear company blamed macro uncertainty and higher inventories for the revised guidance.
V.F. Corporation (NYSE:VFC) now expects adjusted earnings in the range of $2.60 – $2.70 per share for its fiscal 2023, well below its previous projection between $3.05 – $3.15 per share. The updated forecast missed the consensus of $3.04 per share.
Meanwhile, several research firm lowered their price targets for V.F. Corporation (NYSE:VFC) following the revised outlook. For instance, Wells Fargo trimmed its price target for VFC stock from $50 to $40, while Wedbush cut its price target from $48 to $35.
3. Peloton Interactive, Inc. (NASDAQ:PTON)
Number of Hedge Fund Holders: 39
Peloton Interactive, Inc. (NASDAQ:PTON) is next on the list of 5 biggest losers this week. The stock lost about 16 percent of its value in the current week after it decided to sell its exercise equipment through Dick’s Sporting Goods stores.
The latest partnership is a part of its broad efforts to revive its sales. However, many investors are worried the move could hurt Peloton’s profit margins. Peloton Interactive, Inc. (NASDAQ:PTON) shares have already lost about 80 percent of their value this year alone.
Separately, investment management firm Rowan Street Capital also discussed Peloton Interactive, Inc. (NASDAQ:PTON) in its first-half 2022 investor letter, stating:
“Peloton Interactive, Inc. (NASDAQ:PTON) has been a costly mistake for the fund thus far. We started a small position back in September of 2020 and added to it as the stock declined and the price got “cheaper and cheaper”.
We would like to walk you through the rationale why we bought the stock in the first place and why we added to the position. We will give you just a short summary in the main body of the letter, and for those who are interested in a more detailed version, we have included a write-up on Peloton in the Appendix at the end of this letter.
The trial is still out whether we made a mistake on the company, but we definitely made the mistake on the weighting of our position and the price that we originally paid…” (Click here to read more)
2. NIKE, Inc. (NYSE:NKE)
Number of Hedge Fund Holders: 72
Shares of NIKE, Inc. (NYSE:NKE) fell nearly 13 percent this week. Much of that drop came after the footwear and apparel giant cautioned that its margins would stay under pressure throughout the year.
NIKE, Inc. (NYSE:NKE) has been offering heaving discounts to clear its elevated inventory levels. Like the rest of the industry, the hefty promotions are eating up its margins. In addition, the strengthening dollar is also weighing on its profitability.
Meanwhile, NIKE, Inc. (NYSE:NKE) recently announced better-than-expected results for its fiscal first quarter. The company earned 93 cents per share on revenue of $12.7 billion. On the other hand, analysts were looking for earnings of 92 cents per share on revenue of $12.3 billion.
Despite beating expectations, Wedbush analyst Tom Nikic cut its price target for NIKE, Inc. (NYSE:NKE) from $121 per share to $101 per share. The analysts called the latest results “choppy.”
1. Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM)
Number of Hedge Fund Holders: 72
Shares of Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) slid nearly six percent this week after Apple Inc, one of its leading customers, scrapped plans to boost the production of its newly rolled out iPhone 14.
Moreover, Apple also reportedly refused to accept any price hike by Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) for its chips used in iPhones. Meanwhile, major clients from the gaming and PC market also plan to reduce orders amid fading demand.
On the other hand, rising inflation and geopolitical tensions between Washington and Beijing could also weigh on the results of Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) in the near term.
You can also take a peek at 10 Best EV Materials Stocks To Buy and 10 Best Cyclical Stocks for Inflation.
Follow Insider Monkey on Twitter
Suggested articles:
Disclosure: None. 10 Biggest Losers this Week is originally published on Insider Monkey.
Hedge Fund Resource Center