Why Cal-Maine Foods, Papa John's International, and Netgear Slumped Today

Major benchmarks were mixed on Monday as investors geared up for a week in which more than a third of the S&P 500 will report earnings.

But not every stock experienced the broader market's relative indifference. Read on to see why Cal-Maine Foods (NASDAQ: CALM), Papa John's International (NASDAQ: PZZA), and Netgear (NASDAQ: NTGR) each slumped today.

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Cal-Maine Foods’ tariff troubles

Shares of Cal-Maine Foods fell as much as 5.3%, then partially recovered to close down 2.2% after the egg producer announced mixed fiscal fourth-quarter 2018 results.

Cal-Maine Foods' revenue soared 61.4% year over year to $443.1 million, which translated to net income of $71.8 million, or $1.48 per diluted share. Analysts, on average, were looking for slightly lower earnings of $1.47 per share on higher revenue of $455.8 million.

CEO Dolph Baker called it a "strong finish" to the fiscal year, noting it was the company's best-ever fourth quarter thanks to strong consumer demand and higher average selling prices during the Easter holiday. Still, he warned of more price volatility and uncertainty in feed ingredient costs stemming from "geopolitical risks associated with the recently imposed and additional proposed tariffs."

Papa John’s stiff-arms Papa John

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Papa John's International stock sank 9.8% in the wake of the national pizza chain adopting a new stockholder rights plan aimed at preventing founder John Schnatter — who, together with affiliates, owns around 30% of the company — from taking a larger stake in the business. Papa John's says the plan aims to reduce "the likelihood that any person or group gains control of Papa John's through open market accumulation or other tactics without paying an appropriate control premium."

The move follows Schnatter's resignation as chairman earlier this month after his use of a racial slur during an internal conference call. He later called stepping down a "mistake," and accused Papa John's board of not thoroughly investigating the issue.

Shares also climbed late last week amid reports that Schnatter had considered a potential merger with Wendy's just before the scandal. The combination appears significantly less likely, however, with the new rights plan in place.

Guidance overshadows Netgear’s strong quarter

Finally, shares of Netgear dropped 13.6%. The networking hardware specialist announced strong second-quarter 2018 results, but followed with underwhelming guidance.

Netgear's quarterly revenue climbed 10.9% year over year, to $366.8 million, which translated to adjusted (non-GAAP) net income of $18.6 million, or $0.57 per diluted share. By comparison, Netgear's latest guidance called for lower revenue of $340 million to $355 million, and most investors were only looking for earnings of $0.51 per share.

For the current third quarter, however, Netgear told investors to expect revenue of $380 million to $395 million, the high end of which fell below consensus estimates for roughly $397 million.

Still, Chairman and CEO Patric Lo rightly called it an "excellent" performance, helped by growth from its Arlo, Orbi, and Nighthawk products, as well as demand for cable modems and gateways. Lo also noted the company will continue to focus on the impending separation of its Arlo wireless camera business while driving the company's subscription services initiatives for its remaining segments.

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Steve Symington has no position in any of the stocks mentioned. The Motley Fool recommends Netgear. The Motley Fool has a disclosure policy.

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