Why Pearson, FactSet Research Systems, and Actuant Slumped Today

Major benchmarks finished with modest losses on Thursday, as investors kept struggling with extraordinary news items that are pulling the markets in different directions. Between up-and-down U.S.-China trade negotiations and inquiries related to the possible impeachment of President Trump, it's been hard for the overall market to find direction. Some individual companies dealt with news that sent their shares significantly lower. Pearson (NYSE: PSO), FactSet Research Systems (NYSE: FDS), and Actuant (NYSE: ATU) were among the worst performers. Here's why they did so poorly.

Pearson gets a failing grade

Shares of Pearson fell 15% after the educational publisher warned that its third-quarter results wouldn't be as strong as many had hoped. The company said in its nine-month trading report that its higher education courseware segment likely saw revenue drop about 10% so far in 2019, as students continue to shift their demand away from physical course books and toward digital distribution. Full-year declines there will likely amount to 8% to 12%, which was worse than the 5% slump it previously predicted. Moreover, Pearson suggested that earnings will likely come in toward the low end of its guidance range. The company's still hoping for a long-term recovery, but many remain skeptical about Pearson's longer-term prospects, especially as rivals try to fight each other for position in the industry.

Pearson logo of stylized P made into an explanation point and question mark.

Image source: Pearson.

FactSet disappoints with its outlook

Shares of FactSet Research Systems dropped 9% following the financial data provider's release of fiscal fourth-quarter financial results. Revenue climbed 5%, lifting adjusted net income by 19% from year-ago levels. However, guidance for the new 2020 fiscal year fell short of what investors were hoping to see on both the top and bottom lines. FactSet has benefited greatly from the bull market in stocks over the past decade, as more institutional clients have started using its services. However, if a downturn comes, those clients could scale back on their purchases to conserve money, and that could be painful for shareholders who have until now enjoyed a nice run higher.

The company previously known as Actuant goes lower

Finally, shares of Actuant lost 12%. The company, which changed its official name to Enerpac Tool Group earlier this week, said that core sales were down 3% year over year, and adjusted earnings were flat. The industrial tools and services company has worked hard to reinvent itself, seeking to divest less profitable parts of the business in favor of its best prospects for growth. Yet the global economy hasn't been kind to the company, and it'll take time for those steps to take full effect. Traders seemed to be losing patience with Actuant/Enerpac today, but long-term investors should see how things go with the ongoing restructuring before drawing their own conclusions.

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 quadrupled 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 June 1, 2019.

Dan Caplinger has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends FactSet Research Systems. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story


Latest Markets Videos

    The Motley Fool

    Founded in 1993 in Alexandria, VA., by brothers David and Tom Gardner, The Motley Fool is a multimedia financial-services company dedicated to building the world's greatest investment community. Reaching millions of people each month through its website, books, newspaper column, radio show, television appearances, and subscription newsletter services, The Motley Fool champions shareholder values and advocates tirelessly for the individual investor. The company's name was taken from Shakespeare, whose wise fools both instructed and amused, and could speak the truth to the king -- without getting their heads lopped off.

    Learn More