7 Reasons to Worry About Next Week
It's official: The European debt crisis has more ups and downs than National Lampoon's European Vacation. The market's spiking and tanking with every whiff of the region's sovereign debt dilemma.
There's also more uncertainty closer to home. 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.
|Zagg (NAS: ZAGG)||$0.09||$0.16||Add|
|InterOil (NYS: IOC)||($0.01)||$0.07||Add|
|Motricity (NAS: MOTR)||($0.09)||$0.15||Add|
|Blue Coat Systems (NAS: BCSI)||$0.13||$0.38||Add|
|Country Style Cooking (NAS: CCSC)||$0.12||$0.15||Add|
|salesforce.com (NYS: CRM)||$0.31||$0.32||Add|
|Sears Holdings (NAS: SHLD)||($2.29)||($1.71)||Add|
Source: Thomson Reuters.
Clearing the table
Let's start at the top with Zagg. The maker of protective film coverings and other accessories for smartphones, tablets, and MP3 players has been thriving over the past couple of years. There is a booming market for third-party gear that original hardware manufacturers just aren't putting out there. Zagg's still a speedster on the top line. Wall Street is banking on a 94% surge in revenue. Unfortunately, lower projected profitability means margins are getting clobbered.
InterOil is an oil explorer trying to cash in on its Papua New Guinea project. Analysts are banking on a small deficit this quarter, reversing the modest profit it posted a year earlier.
Motricity helps wireless carriers profit from old-school feature phones by arming them with some smartphone-like features. Stateside consumers continue to trade in their traditional handsets for smartphones, but Motricity felt it had a shot at expanding overseas, where the migration cycles are still in the early stages. Like InterOil, quarterly profits are now turning into deficits.
Blue Coat Systems is a provider of Web security and networking solutions. This would seem like a booming niche, but the pros believe Blue Coat will earn just a third of what it did during last year's quarter.
Country Style Cooking is a fast-growing restaurant chain in China, offering quick and economical Sichuan-style comfort food. This seems like a no-brainer growth pick. As an emerging economy improves -- and China clearly fits the bill -- the growing middle class discovers the joys of eating out. Unfortunately, Country Style Cooking has had a difficult time keeping its margins in check. It has missed Wall Street's profit targets for three consecutive quarters and patience is starting to wear thin with last year's once-promising IPO.
When it comes to cloud computing, salesforce.com is worthy of the pioneer hat. The company has grown quickly over the years by providing companies with server-stored enterprise software solutions that are cheaper than traditional programs.
The fact that Sears Holdings is posting a loss isn't really a surprise. The parent company of Sears and K-Mart has been a retail disaster over the past decade. The problem here is that analysts are banking on larger losses.
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 Motley Fool newsletter serviceshave recommended buying shares of salesforce.com and Country Style Cooking Restaurant.Motley Fool newsletter serviceshave recommended shorting salesforce.com. 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, except for Motricity. Rick is also part of theRule Breakersnewsletter research team, seeking out tomorrow's ultimate growth stocks a day early.