After rising through Wednesday, stocks retreated in the final
two trading days of the week, with the
Dow Jones Industrial Average
(DJINDICES: ^DJI) managing a meager 0.33% gain. The
(SNPINDEX: ^GSPC) closed the week 0.15% lower.
The driving force behind the late-week decline seemed to be
investor anxiety surrounding a vote that could see the U.K. leave
the European Union, combined with a drop in
. These two headlines were enough to send the global markets into
a small sell-off Friday. Here are a few stocks making major moves
or headlines this week.
Restoration Hardware Holdings, Inc.
's(NYSE: RH) investors were hit hard as the stock got
pummeled this week, declining more than 20% after it posted
another disappointing earnings report. While the first quarter is
seasonally slow for the company, its surprise loss of $0.05 per
share fell short of analysts' expectations of $0.05 per-share
profit. Worse yet, it was a large decline when compared to last
year's first-quarter result of $0.23 per share.
In addition to earnings checking in lower than expected,
revenue increased 8%, with comparable sales moving 4% higher.
This generally would be a silver lining for investors, but the
expectations for those metrics were higher, as well. Management
was quick to point to headwinds caused by the negative impact of
energy and currency on the markets, but also internal issues with
All in all, the disappointing quarter led management to reduce
its full-year EPS guidance by $0.90 to $1.00, down to a full-year
total EPS of between $1.60 and $1.80. This is below analysts'
estimates of $2.66.
Restoration Hardware's stock price has dropped 66% in 2016
alone, and value investors looking to swoop in should weigh the
risks and rewards. The company has major strategies hanging in
the wind, such as launching RH Modern, and moving from a
promotional to a membership-selling model using the RH Grey
On the flip side, investors in
LDR Holding Corp.
(NASDAQ: LDRH) are having a fantastic week after the
medical-device company, which focuses on treatment of spinal
disorders, announced that it's being acquired by
Zimmer Biomet Holdings
(NYSE: ZBH) . Looking at the details, Zimmer Biomet put a $1
billion offer on the table to acquire LDR in an all-cash deal.
That offer values the shares at $37 each, which was a hefty
premium to the stock's closing price on Monday -- hence, the 67%
jump for the week.
"This highly strategic and complementary transaction will
enhance Zimmer Biomet's innovation leadership in musculoskeletal
healthcare by adding a premier spine platform to our portfolio of
solutions," said Zimmer Biomet CEO David Dvorak, in a press
The deal is expected to close in the third quarter of 2016,
and Zimmer Biomet expects the acquisition to accelerate the
future growth of its total business. Management will update its
revenue guidance to reflect the acquisition when the deal closes.
While the revenue will be adjusted, investors should temper
expectations for incremental earnings per share from the deal --
at least for this year -- as it's expected to be neutral to the
bottom line this year, and accretive to EPS in 2017 and
Lastly, making headlines late in the trading week was
(NASDAQ: TSLA) , and not for good reasons. The Daily Kanban
broke the news
, and reported that, in three instances, Tesla owners were at
least asked by Tesla to sign "goodwill agreements," often in
return for covering out-of-warranty repair costs on some
vehicles. The Daily Kanban's post notes that reports
have circulated for months about a potential defect in Tesla's
suspension, which may cause the suspension control arms to
Tesla's Model S. Image source: Tesla Motors.
"The agency immediately informed Tesla that any language
implying that consumers should not contact the agency regarding
safety concerns is unacceptable, and NHTSA expects Tesla to
eliminate any such language," said NHTSA spokesman Bryan Thomas,
Thursday, giving its side of the situation.
"There is no safety defect with the suspensions in either the
Model S or Model X," the company said in a blog post. "On rare
occasions when repairs are discounted or conducted for free,
customers are asked to sign a "goodwill agreement," Tesla's
response continued. "The basic point is to ensure that Tesla
doesn't do a good deed, only to have that used against us in
court for further gain."
On one hand, an agreement such as this is uncommon in the
automotive industry, and rumors of a potential cover-up have
fired up across the Internet -- which should initially be taken
with a grain of salt in these situations. On the other hand, if
there have been injuries or deaths due to the suspension issues,
this is a development Tesla investors will want to watch, because
it could have serious brand-image and financial impacts.
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