What Happened?
A number of stocks fell in the morning session as the broader market tumbled in the morning session after a surprisingly weak U.S. jobs report and the announcement of new, widespread tariffs on imported goods. The U.S. economy added only 73,000 jobs in July, falling far short of the 109,000 forecast. Compounding the issue, job gains for May and June were revised down by a combined 258,000, signaling what some see as “increasing signs of fragility” in the labor market. Simultaneously, the White House announced new tariffs, ranging from 10% to 41%, on goods from 92 countries. This “double whammy” of negative news has intensified fears that ongoing trade wars are damaging the U.S. economy. The combination of a weaker labor market and new trade barriers has rattled investor confidence, fueling expectations that the Federal Reserve may be forced to cut interest rates to support the economy.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks.
Among others, the following stocks were impacted:
- Apparel Retailer company Torrid (NYSE: CURV) fell 3.2%. Is now the time to buy Torrid? Access our full analysis report here, it’s free.
- Vehicle Retailer company Camping World (NYSE: CWH) fell 3.5%. Is now the time to buy Camping World? Access our full analysis report here, it’s free.
- Auto Parts Retailer company Monro (NASDAQ: MNRO) fell 5%. Is now the time to buy Monro? Access our full analysis report here, it’s free.
- Discount Retailer company Burlington (NYSE: BURL) fell 3.1%. Is now the time to buy Burlington? Access our full analysis report here, it’s free.
- Sports & Outdoor Equipment Retailer company Dick's (NYSE: DKS) fell 3.4%. Is now the time to buy Dick's? Access our full analysis report here, it’s free.
Zooming In On Monro (MNRO)
Monro’s shares are very volatile and have had 24 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 2 days ago when the stock dropped 17% on the news that the company reported a significant net loss for its fiscal first quarter, missing bottom-line estimates despite a beat on revenue. While the automotive service provider’s revenue increased 2.7% to $301 million, beating expectations, this was overshadowed by a significant drop in profitability. The company posted a net loss of $8.1 million, or $0.28 per share, a stark contrast to the $5.9 million net income recorded in the prior-year quarter. This bottom-line performance was driven by several factors. Gross margins contracted by 170 basis points due to higher technician labor and material costs. Furthermore, operating expenses surged, weighed down by $14.8 million in costs tied to the closure of 145 underperforming stores. The combination of shrinking margins and significant one-off charges ultimately erased the benefits of the sales growth.
Monro is down 42.7% since the beginning of the year, and at $14.07 per share, it is trading 52.8% below its 52-week high of $29.78 from November 2024. Investors who bought $1,000 worth of Monro’s shares 5 years ago would now be looking at an investment worth $240.76.
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