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Here’s Why Alcoa Inc (AA) and 4 Other Stocks Are in the Red Today

It’s the official start of earnings season today and though crude prices are modestly higher, pushing up several energy stocks this morning, five other stocks haven’t proven to be as fortunate. Alcoa Inc (NYSE:AA), Starbucks Corporation (NASDAQ:SBUX), Juniper Networks, Inc. (NYSE:JNPR), Fastenal Company (NASDAQ:FAST), and L Brands Inc (NYSE:LB) are among the morning’s losers, having all taken hits even before the market opened. Let’s take a closer look at the reasons why these stocks are declining and see what the world’s greatest investors think of them.

Our research determined that following the small-cap stocks that hedge funds are collectively bullish on can help a smaller investor to beat the S&P 500 by around 95 basis points per month (see the details here).

Industrial metal producer Alcoa Inc (NYSE:AA) reported mixed first quarter earnings after the market closed yesterday and the market didn’t like it. Shares of the aluminum giant are down by nearly 5% in morning trading after the company reported earnings of $0.07 per share on revenue of $4.95 billion, beating earnings estimates by $0.05 per share but missing revenue expectations by $190 million. Revenue fell by 14.9% year-over-year, largely caused by a drop in alumina and aluminium prices, the strong dollar, and the company’s curtailed facilities. In better news, Alcoa’s plan to split the company in two remains on track for the second half of 2016. Alcoa also expects there to be a 1.1 million metric ton global aluminum deficit and 1.4 million metric ton global alumina deficit in 2016. 41 elite funds in our system held almost 15% of Alcoa Inc (NYSE:AA)’s float at the end of the fourth quarter. The number of funds long the company was down by five from the end of the third quarter.

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Shares of Starbucks Corporation (NASDAQ:SBUX) are off by over 3.5% this morning after Deutsche Bank downgraded the company to ‘Hold’ from ‘Buy’ and trimmed its price target on the stock to $65 per share from $70 per share. Deutsche Bank’s Brett Levy thinks that much of the good news in Starbucks has already been priced in, and that the stock might face challenging sales comps over the next few quarters. The analyst still likes Starbucks for the longer-term, however, given the company’s best-in-class fundamentals. Mr. Levy just thinks that there might be better entry-points than current prices. The analyst wrote:

“We continue to respect the company’s longer-term strategy, and remain impressed with Starbucks’ industry leading SSS growth and solid profit growth, but believe these factors are fully priced into the shares at this time.”

Starbucks Corporation (NASDAQ:SBUX) shares have surged by almost 30% over the last twelve months and the stock counts 61 shareholders tracked by Insider Monkey as being among its believers as of December 31, with Cliff Asness‘ AQR Capital Management among them.

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On the next page, we examine why shares of Juniper Networks, Fastenal Company, and L Brands are all having rough mornings.


Juniper Networks, Inc. (NYSE:JNPR) shares are 9% in the red in this morning after the tech company warned that its first quarter financial results could be a little lighter than expected. For the time period, Juniper now expects EPS of $0.35-to-$0.37 and revenue of $1.09 billion-to-$1.10 billion, while previous guidance had called for $0.42-to-$0.46 in EPS and $1.15 billion-to-$1.19 billion in revenue. The company cited weaker than anticipated demand from the enterprise sector and unfavorable timing of deployments among certain EMEA and U.S. Tier 1 telecoms. Juniper is set to release its official earnings on April 28. The number of funds in our database long Juniper Networks, Inc. (NYSE:JNPR) fell by six to 35 during the fourth quarter.

Shares of Fastenal Company (NASDAQ:FAST) have fallen by 3% this Tuesday morning after the company reported slightly lower-than-expected first quarter results. For the quarter, Fastenal’s EPS came in at $0.44, missing estimates by $0.01, while sales came in at $986.68 million, missing analysts’ forecasts by $1.92 million. Daily sales rose by 1.9% to $15,417. The weak global economy played a part in the earnings miss. 13 funds that we track owned $362.75 million of Fastenal Company (NASDAQ:FAST)’s shares on December 31, which accounted for 3.10% of the float .

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L Brands Inc (NYSE:LB) has retreated by 3% this morning after analysts at Goldman Sachs downgraded the stock to ‘Neutral’ from ‘Buy’. The investment bank’s analysts think the major restructuring initiative at the company will likely send near-term sales lower and postpone a rally in the stock. They also cut their price target on the stock to $91 per share from $115 per share. Shares of L Brands Inc (NYSE:LB) are already off by more than 15% year-to-date. 24 of the 785 or so funds that we monitor owned $1.93 billion of L Brands’ shares at the end of the fourth quarter, down from 26 funds with $2.21 billion in holdings at the end of the third quarter.

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Disclosure: None