7 Reasons to Worry About Next Week
Earnings season is off to a reasonably good start, but don't get too comfortable. Just wait until you 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
|Corinthian Colleges (NAS: COCO)||($0.06)||$0.38||Add|
|GeoEye (NAS: GEOY)||$0.56||$0.61||Add|
|JDS Uniphase (NAS: JDSU)||$0.13||$0.20||Add|
|Garmin (NAS: GRMN)||$0.50||$0.70||Add|
|Tesla Motors (NAS: TSLA)||($0.59)||($0.37)||Add|
|Eastman Kodak (NYS: EK)||($0.44)||($0.02)||Add|
|Starbucks (NAS: SBUX)||$0.36||$0.37||Add|
Source: Thomson Reuters.
Clearing the table
Let's start at the top with Corinthian.
The for-profit secondary educator was a recession-resistant growth stock a few years ago. As the economy began to teeter, Corinthian's enrollments grew as displaced workers -- or the soon-to-be displaced workers -- sought out ways to conveniently and cost-effectively retool their skill sets and beef up their resumes.
The entire niche has been slammed over the past year, as crummy student repayment rates and faltering enrollments have rained on the previously all-weather specialty. Corinthian hasn't posted a quarterly deficit in years, but that's exactly what the pros see coming on Tuesday.
GeoEye also reports Tuesday. The provider of high-resolution satellite imagery wouldn't seem to be in trouble. Government demand may be at risk given budgetary cutbacks, but there's enough private sector demand -- from mapping websites to oil companies -- to keep the company and its shutterbug ways busy. In fact, Wall Street does see a marginal uptick in revenue at GeoEye. The rub here is that dinged-up margins are weighing on bottom-line growth.
JDSU is a fiber-optic component supplier. Telecom equipment companies have been volatile in recent quarters, and JDSU investors are bracing for a slowdown. Analysts also see lower earnings for the upcoming quarter and for all of fiscal 2012.
Garmin isn't a surprising name to see here. A few years ago, Garmin's GPS gadgetry was the hot gadget for drivers. Who needs a Garmin nuvi these days when more and more people have smartphones? Garmin has other products in its arsenal. Garmin fans will also argue that a dedicated GPS gizmo is easier to use than a smartphone, even with an integrated dashboard system. Unfortunately, people these days prefer to own fewer devices that do more.
Tesla is the automaker that was making electric cars before gas-less cars were cool. We're still heading toward next year's Model S rollout. Tesla's more affordable sedan will grow its presence on the road, but -- for now -- the red ink is getting worse.
Kodak may be rich in patents, but it's poor in profitability. Life hasn't been the same since digital cameras and online photo-sharing has slurped up demand for film and photofinishing. Things haven't been easy for the pioneer that has only managed three profitable quarters since the end of 2007.
Finally, we have Starbucks. Everyone seems to love the notion of the barista baron as a growth stock, but reality pours a stronger brew. Wall Street is braced for a slight dip on profitability and a mere 4% top-line advance.
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 Starbucks. Motley Fool newsletter services have recommended buying shares of GeoEye and Starbucks. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure 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 theRule Breakersnewsletter research team, seeking out tomorrow's ultimate growth stocks a day early.
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