These 2 Stocks Didn’t Tell Investors What They Wanted to Hear | The Motley Fool

These 2 Stocks Didn’t Tell Investors What They Wanted to Hear | The Motley Fool

The stock market had a tough week as Friday’s declines added to those from the prior couple of days. Worries about a potential recession remained foremost in investors’ minds, and all three of the major U.S. indexes — the Dow Jones Industrial Average (^DJI -0.85%), S&P 500 (^GSPC -1.11%), and Nasdaq Composite (^IXIC -0.97%) — ended the session down by about 1%.

Index

Daily Percentage Change

Daily Point Change

Dow

(0.85%)

(282)

S&P 500

(1.11%)

(43)

Nasdaq

(0.97%)

(105)

Data source: Yahoo! Finance.

Accenture (ACN -5.92%) and Ford Motor Company (F -6.98%) were not the only stocks to lose ground on Friday, but each of them had a story to tell that their shareholders didn’t seem to want to hear. Below, you’ll learn more about the consulting giant and the global automaker, and why they were making headlines as the week drew to a close on Wall Street.

Accenture could see a slowdown

Shares of Accenture fell by 6% on Friday. The consulting company reported fiscal first-quarter results that were generally upbeat, but shareholders weren’t pleased with the company’s outlook for the near future.

In the quarter, which ended Nov. 30, Accenture had solid growth in key metrics. Revenue rose 5% year over year to $15.7 billion, despite 10 percentage points of headwinds attributable to the strong U.S. dollar. Sales were particularly strong in its health & public service and resources industry groups, while its growth rates in financial services and in communications, media & technology were more muted. Its operating margin expanded from year-ago levels, and earnings of $3.08 per share were 11% higher than in the prior-year period.

The problem, though, is that foreign currency weakness is likely to sap most of Accenture’s growth throughout fiscal 2023. For the fiscal second quarter, expected growth of 6% to 10% will get hit by a 5-percentage-point impact from the stronger dollar. Full-year growth of 8% to 11% in local currency terms can also expect to see a reduction of 5 percentage points when reported in U.S. dollars.

Even management’s boost to its full-year earnings guidance and a 15% quarterly dividend hike to $1.12 per share weren’t enough to reassure investors about Accenture’s long-term prospects. That reflects just how much fear there is about corporate earnings heading into 2023.

Ford flexes its pricing power muscles again

Meanwhile, shares of Ford Motor closed Friday’s trading session down by 7%. The automaker took advantage of its popular brand and high demand for electric vehicles, but investors don’t seem happy with the strategy that it’s following.

Ford announced an increase in the price of its new full-size F-150 Lightning electric pickup truck. Various reports seemed to be looking at slightly different models of the EV pickup and pointed to different tools for determining pricing, but several pointed to an increase of more than $4,000 to nearly $56,000 for the cheapest available model.

The automaker tried to justify the move based on the higher costs of its materials. Yet this was the third price boost this year for the F-150 Lightning, and it comes at a time when the outlook for the consumer economy is increasingly worrisome. Shareholders seem concerned that with consumers already having trouble finding cash for discretionary purchases and with financing costs rising along with interest rates, Ford is risking the loss of many potential sales to buyers who will now be unable to afford the vehicles.

Demand for electric vehicles has been strong, but with prices rising, buyers will inevitably reach a breaking point. Unfortunately, we might have to wait until Ford’s next quarterly results come out before we know if its actions have been counterproductive.

Dan Caplinger has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Accenture Plc. The Motley Fool recommends the following options: long January 2025 $290 calls on Accenture Plc and short January 2025 $310 calls on Accenture Plc. The Motley Fool has a disclosure policy.

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