Why Quanex (NX) Shares Are Trading Lower Today

What Happened?

Shares of building products company Quanex (NYSE:NX) fell 13.4% in the morning session after the company reported second-quarter results that included a significant miss on profit and a full-year revenue forecast that fell short of Wall Street's expectations. 

Although the company surpassed Wall Street's revenue expectations for the second quarter, its non-GAAP profit of $0.69 per share came in 18.1% below analysts' consensus estimates. Adding to investor concerns, Quanex's full-year revenue guidance of $1.82 billion at the midpoint was 1.6% below what analysts had anticipated. The combination of a substantial earnings miss and a disappointing forward-looking forecast appears to be the primary driver behind the significant drop in the company's stock price.

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What Is The Market Telling Us

Quanex’s shares are very volatile and have had 22 moves greater than 5% over the last year. But moves this big are rare even for Quanex and indicate this news significantly impacted the market’s perception of the business.

The previous big move we wrote about was 15 days ago when the stock dropped 3.1% on the news that markets continued to decline, as investors grew cautious ahead of a key speech by Federal Reserve Chair Jerome Powell. The move came as U.S. equity markets recorded a fifth consecutive day of losses for major indexes like the S&P 500, with technology stocks experiencing the largest declines. Investors have grown wary that the sharp rally in the tech sector since April may have advanced too far. The market-wide caution is largely driven by the upcoming Jackson Hole symposium, a meeting of central bankers, where traders are anxiously awaiting Fed Chair Powell's speech on Friday for guidance on the future path of interest rates.

Quanex is down 22.3% since the beginning of the year, and at $18.28 per share, it is trading 42% below its 52-week high of $31.51 from November 2024. Investors who bought $1,000 worth of Quanex’s shares 5 years ago would now be looking at an investment worth $998.63.

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