Why Mattel, Brinker International, and Nucor Slumped Today – Motley Fool
Wall Street had a tough go of it on Thursday, but things didn’t turn out as badly as some might have thought early in the day. The Dow Jones Industrials managed to come back from triple-digit losses to finish the day down just 14.7 points, and other major benchmarks were able to cut much more substantial losses by the end of the trading session. General market uncertainty over economic and political issues following yesterday’s interest rate hike from the Federal Reserve fueled the downbeat mood, but some individual stock news also made things gloomier. Mattel (NASDAQ:MAT), Brinker International (NYSE:EAT), and Nucor (NYSE:NUE) were among the worst performers on the day. Below, we’ll look more closely at these stocks to tell you why they did so poorly.
Mattel cuts its dividend
Shares of Mattel dropped 7% after the company made the long-anticipated decision to reduce its quarterly dividend payout. The toymaker said at its investor day presentation that it would cut its dividend by more than 60%. Investors will get just $0.15 per share going forward. The move is part of a broader strategy from Mattel to reinvigorate its business and will accompany cost-cutting measures designed to boost available cash by $200 million. With that money, Mattel hopes to invest in growth-producing ventures, especially in the digital and mobile space. By using well-known brands like Barbie and Thomas the Tank Engine, Mattel thinks it can capture more business in the U.S. while also taking advantage of faster growth opportunities in emerging markets. If it succeeds, then Mattel’s dividend cut will seem like a good idea rather than a disappointment.
Brinker gets less appetizing
Brinker International stock fell 10%, hitting its worst level in several years after getting a negative review from a key analyst company. The parent of the Chili’s and Maggiano’s restaurant chains got downgraded by analysts at JPMorgan from overweight to neutral, and the price target from the analyst got cut from $48 per share to $44. Brinker has done a good job of bucking adverse trends in the casual-dining space, but as competition from other segments of the restaurant business continues to intensify, the analysts see little relief in the near future for the restaurant operator. As the audience for Chili’s and Maggiano’s ages, investors fear that Brinker will become less relevant and lose substantial amounts of market share to rivals. Even after moves like adding automation to the ordering process, Brinker will have to work harder to convince investors that it can keep growing.
Nucor sees tougher times ahead
Finally, shares of Nucor dropped 8%. The steelmaker released preliminary guidance for the second quarter that disappointed investors, anticipating between $1 and $1.05 per share. Even though the result would represent Nucor’s best second-quarter results in nine years, Nucor said that decreased performance from its steel mills segment will weigh on its companywide financials. Conditions for steel in the form of hot-rolled sheet products have been worse than originally expected, and imports generally are hurting the steel industry overall. More favorable developments in trade cases and negotiations could help in the second half of the year, but for now, Nucor will need to wait before it can see the positive impact from such moves play out.