5 Reasons to Worry About Next Week
The market may have started off the week on a down note, but it's been trying to claw its way back ever since.
After all, unemployment is finally at a multiyear low, and consumer confidence is firming. However, it's not as if corporate America is playing along completely.
There are more than a few companies that aren't pulling their own weight in this supposed economic recovery.
There are still plenty of names posting lower earnings than they did a year ago. Let's go over a few of the companies that are expected to go the wrong way on the bottom line next week.
Latest Quarter EPS (estimated)
Year-Ago Quarter EPS
|Clean Energy Fuels (NAS: CLNE)||($0.17)||$0.18||Add|
|Ebix (NAS: EBIX)||$0.41||$0.42||Add|
|Affymax (NAS: AFFY)||($0.64)||($0.46)||Add|
|Youku.com (NAS: YOKU)||($0.38)||($0.13)||Add|
|Winnebago (NYS: WGO)||$0.02||$0.11||Add|
Source: Thomson Reuters.
Clearing the table
Let's start at the top with Clean Energy Fuels.
The liquefied natural gas fueling station specialist hit a fresh 52-week high yesterday. Why not? Natural gas is cheap and plentiful, and crude oil prices are skyrocketing.
However, it's never as simple as laying out a pretty thesis. Clean Energy Fuels may be trading at levels last seen 23 months ago, but that doesn't mean that its bottom line is playing along. In fact, analysts see a decent-sized loss out of the company on Monday, reversing a year-ago profit.
Ebix provides cloud-based enterprise software solutions for the insurance industry. Analysts believe that Ebix will come up slightly short in mirroring last year's quarterly profit, but have you seen Ebix's performance relative to expectations? Ebix has topped Wall Street's bottom-line forecasts for eight consecutive quarters. If the streak continues, Ebix will be delivering either flat earnings growth or a marginal gain.
Affymax is hoping investors will look beyond next week's widening deficit. It has a point. The stock took off in December after the FDA advisory panel voted nearly unanimously to recommend Affymax's promising anemia drug, peginesatide.
The future may be bright for Affymax, but success won't come overnight. Analysts don't see the biotech turning an annual profit until 2014.
Youku is China's leading video-sharing site. This is another company whose outright profitability is still more than a year away. It's easy to see the potential of serving video clips in the world's most populous nation, but advertisers have to come around before Youku is raking in more revenue than it has to shell out in expenses.
It probably doesn't help Youku that its nearest publicly traded rival posted disappointing quarterly results last week. Revenue growth was strong, but bandwidth, content, and mobile video service costs all grew even faster.
Finally, we have Winnebago driving the wrong way. It's no shock to see the RV giant here. Who wants to own a house on wheels when gasoline prices are spiking? There will naturally come a time to warm up to Winnebago, but for now the safe bet is to side with the professionals that projected profitability to fall sharply when the company reports on Thursday.
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. Lower earnings translates into higher earnings multiples, and nobody wants to see that happen.
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.
If five reasons to worry aren't enough, let's make your future No. 6. There's a single shocking truth about your retirement that you may not know. It's part of a free report that won't be around forever, so check it out now.
At the time this article was published The Motley Fool owns shares of Winnebago Industries.Motley Fool newsletter serviceshave recommended buying shares of Ebix. 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 theRule Breakersnewsletter research team, seeking out tomorrow's ultimate growth stocks a day early.
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