What Happened?
A number of stocks fell in the afternoon session after U.S. equities traded lower as escalating geopolitical tensions between the U.S. and Iran pushed oil prices above $100 a barrel, rattling investor confidence.
Major indices saw significant declines, with the Dow Jones tumbling. The uncertainty surrounding the conflict drove Brent crude oil higher, effectively acting as a tax on the global economy by increasing costs for businesses and consumers. This sentiment was reflected in the University of Michigan's consumer survey, which fell to a three-month low as households braced for higher inflation, with year-ahead expectations jumping to 3.8%. Richmond Fed President Tom Barkin commented on the situation, noting that the 'fog of war' has deepened economic uncertainty and that historically, such oil price shocks are highly coincident with recessions.
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:
- Industrial & Environmental Services company Driven Brands (NASDAQ: DRVN) fell 3.2%. Is now the time to buy Driven Brands? Access our full analysis report here, it’s free.
- Terrestrial Telecommunication Services company Cogent (NASDAQ: CCOI) fell 2.6%. Is now the time to buy Cogent? Access our full analysis report here, it’s free.
- Business Process Outsourcing & Consulting company Concentrix (NASDAQ: CNXC) fell 5.1%. Is now the time to buy Concentrix? Access our full analysis report here, it’s free.
- Specialized Technology company Arlo Technologies (NYSE: ARLO) fell 3.8%. Is now the time to buy Arlo Technologies? Access our full analysis report here, it’s free.
- Data & Business Process Services company Planet Labs (NYSE: PL) fell 5%. Is now the time to buy Planet Labs? Access our full analysis report here, it’s free.
Zooming In On Concentrix (CNXC)
Concentrix’s shares are extremely volatile and have had 34 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 3 days ago when the stock dropped 22.4% on the news that the company reported disappointing first-quarter results and issued a weak financial forecast.
While revenue of $2.5 billion grew 5.4% year-over-year and met Wall Street's expectations, investors focused on declining profitability. The company's operating margin contracted significantly to 4.7% from 7.1% in the same period last year, indicating that rising costs were eating into profits. Additionally, adjusted earnings per share of $2.61 missed consensus estimates. Adding to the negative sentiment, Concentrix's revenue guidance for the next quarter and its full-year earnings forecast both came in below analysts' projections, signaling potential challenges ahead.
Concentrix is down 36.6% since the beginning of the year, and at $26.14 per share, it is trading 59.8% below its 52-week high of $65.04 from March 2025. Investors who bought $1,000 worth of Concentrix’s shares 5 years ago would now be looking at only $182.57.
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