4 Reasons to Worry About Next Week
Earnings season is just around the corner, and it's time to get worried.
There are way too many economists concerned that the global recovery is starting to derail, and it's hard to argue that the United States can buck the trend when consumer confidence is sinking and our unemployment rate remains stubbornly high.
If you want bad news that's a bit more tangible, hear what Corporate America has to say next week.
There are still plenty of companies posting lower earnings than they did a year ago. Let's go over a few of the names that are expected to go the wrong way on the bottom line next week.
Latest Quarter EPS (Estimated)
Year-Ago Quarter EPS
|Bank of the Ozarks (NAS: OZRK)||$0.42||$0.60||Add|
|Fairchild Semiconductor (NYS: FCS)||$0.32||$0.42||Add|
|JPMorgan Chase (NYS: JPM)||$0.98||$1.01||Add|
|Winnebago (NYS: WGO)||$0.04||$0.17||Add|
Source: Thomson Reuters.
Clearing the table
Let's start at the top with Bank of the Ozarks.
The Little Rock, Ark.-based banker with more than $4 billion in total assets seems to be doing OK. Bank of the Ozarks even increased its dividend earlier this week. A company doesn't juice up its payouts unless it feels it will earn more in the future. Right?
Well, analysts don't seem to see it that way this time around. Wall Street sees earnings dropping in both the third and fourth quarters this year. They also see net income sliding for all of 2012.
Fairchild Semiconductor makes high-performance power and mobile products. Unfortunately, those power products don't apply to its bottom line. Just like Bank of the Ozarks, analysts expect Fairchild's profitability to fall during the second half of this year and yet again next year.
JPMorgan Chase kicks off what should be an interesting few days of earnings reports out of the financial services heavyweights. Between investment banking, credit card issuing, and traditional banking, JPMorgan covers the very businesses that have drawn public scorn and financial unrest in recent years.
JPMorgan hasn't been as openly criticized as Bank of America (NYS: BAC) and Goldman Sachs (NYS: GS) , but all three banking behemoths are projected to post lower quarterly profits than they did a year earlier. We'll get JPMorgan's results Thursday. Bank of America and Goldman Sachs will chime in the following week.
Finally we have Winnebago rolling in. There are times when it feels as if Winnebago is in two dreadful sectors. When real estate prices are falling and oil prices are climbing who wants to own a house on wheels? Contrary to images of retirees selling their homes and seeing the country in RVs until their nest eggs, or years, run out, a lot of traditional homeowners also own motor homes for weekend getaways. In other words, Winnebago is susceptible to the same recessionary fears that hit the brakes on big-ticket purchases.
Winnebago is targeted to earn a lot less than the $0.17 a share it rang up a year ago on a slight dip in revenue. At least one analyst is even bracing investors for a small loss. We'll see how it plays out come Thursday, but it's not likely to be pretty.
Why the long face, short-seller?
These companies have seen better days. The market has rewarded many of these stocks with reasonable gains over the past year, but they still haven't earned those upticks.
The good news here is that Wall Street already expects these companies to deliver shrinking bottom lines. In other words, the bad news is already baked into the shares.
The more I think about it, the less worried I become.
How do you think these stocks will fare when they report next week? Share your thoughts in the comment box below.
At the time this article was published The Motley Fool owns shares of Bank of America, Winnebago Industries, and JPMorgan Chase. Try any of our Foolish newsletter servicesfree for 30 days. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.Longtime Fool contributor Rick Munarriz calls them as he sees them. He does not own shares in any of the stocks in this story. Rick is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.