7 Reasons to Worry About Next Week
It's the time of the year to be thankful, but that's hard to do when the European debt crisis isn't getting any better and the MF Global fiasco is getting uglier.
There's also more uncertainty from companies that aren't necessarily insolvent. 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.
|Company||Latest Quarter EPS (Estimated)||Year-Ago Quarter EPS||My Watchlist|
|TiVo (NAS: TIVO)||($0.23)||($0.18)||Add|
|Suntech Power (NYS: STP)||($0.26)||$0.18||Add|
|JA Solar (NAS: JASO)||$0.00||$0.47||Add|
|Yingli Green Energy (NYS: YGE)||$0.02||$0.49||Add|
|Hewlett-Packard (NYS: HPQ)||$1.13||$1.33||Add|
|Ship Finance (NYS: SFL)||$0.43||$0.46||Add|
|Brocade (NAS: BRCD)||$0.10||$0.14||Add|
Source: Thomson Reuters.
Clearing the table
Let's start at the top with TiVo.
The patent-rich company that invented the digital video recorder (DVR) is probably better off hitting the rewind button to remember its former days of glory. Losses have been mountainous lately, and subscribers have been declining.
Is it TiVo's fault or have consumers just evolved into stream-happy masses that are no longer interested in recording shows or zapping through commercials because they know that they can catch episodes they miss on demand later?
Suntech Power, JA Solar, and Yingli are three of the half-dozen solar energy stocks reporting next week. Guess what? They are all expected to post deteriorating bottom-line results this time around.
Few will argue against the long-term potential of solar. Photovoltaic cells will one day become a household term. However, green energy is a hard sell when some of solar power's biggest clients in Europe are struggling through the growing sovereign debt nightmare.
HP now has Meg Whitman at the helm, but a new problem-solver doesn't mean that the problems have gone away. HP recently decided to keep its PC business, but now it has to decide what it wants to do with its Palm webOS division after the first -- and perhaps last -- webOS tablet crashed and burned.
Ship Finance has an impressive fleet of oil tankers, dry bulk carriers, and deepwater drilling gear that it utilizes to serve the shipping and offshore drilling industries. Commodity prices may be heading higher -- potentially jacking up demand for its services --but it's just not materializing on the bottom line.
Finally we have Brocade. Selling networking equipment isn't easy in this hazy economy as companies scale back their IT expenditures.
The good news for Brocade is that the company has landed ahead of Wall Street's expectations in each of its four previous quarters. In other words, that points to Brocade earning more than the $0.10 a share that pros are targeting. It probably won't be enough to surpass the $0.14 a share it rang up a year earlier, but it's at least one reason to be hopeful.
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 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 HP. Rick is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.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.