5 Reasons Not to Worry This Week
Things continue to look up in 2012.
The S&P 500 has climbed in eight of this year's nine weeks, consumer confidence is rising, and unemployment is at a three-year low. It's not all perfect, though.
I recently went over some of the companies that are expected to post lower quarterly profits when they report this week.
Thankfully, they're the exceptions and not the rule. Let's go over some publicly traded companies that are expected to stand tall this week by posting year-over-year improvement on the bottom line.
Latest Quarter EPS (Estimated)
Year-Ago Quarter EPS
|MAKO Surgical (NAS: MAKO)||($0.14)||($0.26)||Add|
|Ciena (NAS: CIEN)||($0.05)||($0.14)||Add|
|H&R Block (NYS: HRB)||$0.05||($0.01)||Add|
|Jamba (NAS: JMBA)||($0.14)||($0.21)||Add|
|3SBio (NAS: SSRX)||$0.14||$0.05||Add|
Source: Thomson Reuters.
Clearing the table
Let's start at the top with MAKO Surgical.
Robotics have become a major part of updated hospitals. MAKO's RIO line of robotic arm systems has been lending a "hand" in orthopedic surgeries for a few years. Despite RIO's growing popularity, MAKO has yet to achieve profitability. However, deficits are getting narrower, and that's exactly what the pros see happening when the company reports tomorrow.
Ciena is another company that makes the cut on this week's list of earnings by simply losing less than it did a year earlier. The tech giant with interests in optical networking and enterprise software doesn't have a fine history of making money. It has an accumulated deficit of more than $5.7 billion, and its book value is barely positive.
However, even skeptics will argue that Ciena's future will be brighter than its past. Forget Wednesday's report that will likely feature a narrowing loss. Analysts see the company earning $0.43 a share this fiscal year, and more than doubling on the bottom line to $0.94 a share in fiscal 2013.
H&R Block is about to get busy. It's tax season, and you know that the accounting giant will be busy assisting customers -- in person and electronically -- between now and April 17. Even a small profit in this week's report will be just fine. The projected positive showing will be a welcome break from last year's small loss, but this really sets the stage for the current quarter where H&R Block truly rakes in some serious dough.
Jamba stops its blenders long enough to offer up its quarterly results on Wednesday. The parent company of smoothie leader Jamba Juice is in a good groove these days. It has posted back-to-back profitable quarters for the first time since going public seven years ago.
It's not just the growing popularity of its smoothie shops, though Jamba Juice has scored fourth straight quarters of positive comps. Jamba's refranchising efforts -- where it's been turning over company-owned stores to franchisees -- has resulted in ridiculous margin improvement despite the softening revenue.
None of this is likely to result in Jamba scoring a third consecutive quarter in the black. Smoothies are seasonal, and these fresh summertime treats just aren't very popular during the cool winter months. However, a smaller deficit should be easy given the success of its refranchising program.
Finally, we have 3SBio. The Chinese provider of research, development, manufacturing, and distribution of pharmaceutical products has nearly doubled since being recommended to Rule Breakers newsletter service subscribers less than four years ago. The attractive cost structure and strong track record are helping. The pros are banking on profitability nearly tripling this time around.
Cross those fingers, but know the fundamentals
Investors in these five stocks have a right to be excited. They are all improving their financial situations. They are worthy of the gains that the market rally has bestowed upon them over the past year.
I wouldn't be uncomfortable owning any of these companies. They're doing the right thing, regardless of Mr. Market's mood swings.
The expectations may be high, but these five stocks wouldn't have it any other way.
At the time this article was published The Motley Fool owns shares of MAKO Surgical. Motley Fool newsletter services have recommended buying shares of 3SBio and MAKO Surgical. 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, except for Jamba. Rick is also part of theRule Breakersnewsletter research team, seeking out tomorrow's ultimate growth stocks a day early.
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