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