While the stock market has mostly been on the uptick, some analysts still believe that we’re heading into bear market territory, which means that will put a real test on companies that have been growing fat on profits in the bull market. That could cause some alarm, so for the short sellers, pay attention, as here are a few companies to look at who have slashed their 2018 outlook for a variety of reasons.
Kellogg’s is having its worst day in two decades after the company slashed its profit and earnings outlook. The stock dropped more than 9.6% in trading, which is the largest drop the stock has seen since 1998. Afternoon trading has brought a rebound to share price, but the writing may be on the wall for Kellogg’s. The company has spent more this year on advertising and promotions to drive the sale of its cereal to a more health-conscious consumer. Consumers want breakfast options with less sugar, which means yogurt and protein bar manufacturers have seen a boost. Sales of its morning foods and snack business are down across the board. The brand hasn’t had good luck with press either, as a recent recall of 1.3 million boxes of Honey Smacks cereal has left consumers less interested in boxed cereals.
GM was hit hard by Trump’s trade war and the car company cut its full-year profit forecast in July. The company’s earnings forecast was trimmed from a range of $5.52 to $5.82 down to $5.14 per share. GM says the significant increase in commodity costs and the sinking valuation of the Argentine peso and Brazilian real have affected its performance in several markets. The tariffs on steel and aluminum imports has caused an increase in raw materials, which is passed along to end consumers with the finished product. GM sold 17 million vehicles for 2018, but the company seems uncertain if they can reach that number in 2019.
GE recently slashed the price of its dividend payment to one cent per share. The stock for the former industrial giant was below $10 after the announcement. Plenty of analysts believe that the move was necessary for GE, but that it won’t sit well with investors. An analyst from Habor Advisory says that a substantial percentage of shares are owned by retired employees and individuals who rely on their dividend payments. Another analyst says there’s no reason technical investors should be buying General Electric. Taking a look at the company’s charts from Finviz, it has been declining for more than ten years now.
ELF is a beauty retailer that seems to be down trending with the market in general. The company’s revenue growth dropped 3% compared to the last quarter. Gross profit margin fell to 64% of sales, which management says can be attributed to shifts in foreign currency. ELF partners with retailers like Walmart, Target, and Ulta Beauty to offer its products to customers, but the retail sector continues to take a beating.