Why these 4 shares are getting hammered today

Credit: Alex Proimos

After a volatile start to the day, the S&P/ASX 200 (Index: ^AXJO) (ASX:XJO) has managed to climb 0.6% higher to 5273 points.

As investors wait for today’s RBA decision, a number of stocks have been sold off following recent trading updates. Four of today’s worst performers include:

Woolworths Limited (ASX: WOW)

Shares of Woolworths have staged a mini-comeback this afternoon but are still trading 0.4% lower following a disappointing third quarter update. Despite investing $400 million in lowering prices, adjusted same store sales declined by 0.9%. Price deflation is having a major impact on the supermarket giant and this latest result sees rival, Coles, outperform Woolworths for the 27th consecutive quarter. It appears further investment from Woolworths will be required before it will be able to regain market share from other competitors in the sector.

Woolworths shares have lost more than 24% over the past 12 months.

Surfstitch Group Ltd (ASX: SRF)

Shares of the online action sports retailer have lost more than half of their value today after the company announced a shock earnings downgrade. The company expects EBITDA to be between $2-$3 million for the full year ending June – down from its previous forecasts of between $15-$18 million. Despite generating double digit revenue growth, margins have been squeezed by the need to increase its advertising spend in the face of more difficult trading conditions. Recent acquisitions have also not been integrated as fast as expected and this has also contributed to the downward revision to expected earnings. Investors have also been left disappointed with the lack of information regarding the potential private equity bid by former CEO and founder Justin Cameron.

Shares of Surfstitch have lost nearly 72% over the past 12 months.

Slater & Gordon Limited (ASX: SGH)

Following a huge day of gains yesterday, shares of Slater & Gordon have today taken a breather and fallen by more than 11% to 52.5 cents. Some investors will without a doubt be locking in profits today, while others may have reassessed the law firm’s position in light of yesterday’s update. Although the company has bought itself some extra time from its lenders, it still remains in a difficult financial position. As highlighted here, there remains doubt as to whether or not Slater & Gordon has the capability to convert its work in progress (WIP) into cash that will enable it pay its debts as they come due. As a result, it remains a high risk proposition and investors should expect further volatility from here.

Shares of Slater & Gordon have lost nearly 92% over the past 12 months.

Tabcorp Holdings Limited (ASX: TAH)

Shares of Tabcorp have had a terrible week so far with today’s 2% fall taking the shares’ weekly loss to more than 6%. Investors are still reacting negatively to yesterday’s third quarter trading update that showed Group revenues increased by only 1.9% from the prior corresponding period (pcp). The company has blamed an increase in gaming wins by customers for the subdued result, but did highlight that trading conditions in NSW and Victoria remain strong. Tabcorp also announced it will no longer be providing quarterly updates to the market and instead will only be reporting on a half-yearly basis to encourage a longer term view of the company’s performance.

Tabcorp shares have lost 14% over the past 12 months.

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Motley Fool contributor Christopher Georges owns shares of Surfstitch. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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