5 Reasons Not to Worry This Week
It's not a perfect world out there for investors.
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
|Kroger (NYS: KR)||$0.73||$0.70||Add|
|FactSet Research Systems (NYS: FDS)||$1.04||$0.92||Add|
|Capstone Turbine (NAS: CPST)||($0.02)||($0.04)||Add|
|Synutra (NAS: SYUT)||$0.18||($0.15)||Add|
|Pier 1 Imports (NYS: PIR)||$0.16||$0.12||Add|
Source: Thomson Reutrs.
Clearing the table
Let's start at the top with Kroger.
Kroger is the grocery store giant. Investors have typically viewed supermarket operators as all-weather investments. Whether the economy is rising or falling, folks still have to eat. Sure, in good times they may spend more on pricier items, but lean times also sends shoppers trading down to the chain's cheaper house brands.
It's a win-win scenario.
FactSet Research provides financial services professionals with high-end financial data. Some of the pros eyeing steady growth may want to take a look at the research provider itself. FactSet is expected to grow its profitability by 13% to $1.04 a share when it reports on Tuesday.
Capstone is a maker of low-emission microturbine systems. It has shipped more than 6,500 of its Capstone MicroTurbine systems, and that's simply scratching the surface of what's possible. Yes, Capstone is losing money. It's also problematic to find that the company has posted wider deficits than analysts were expecting in three of its past four quarters. However, analysts do see Capstone breaking even this fiscal year, which ends next March.
For now, investors will simply have to appreciate narrowing quarterly losses.
Synutra International's main business is selling baby formula in China. Yes, the country does try to actively curb population growth, but it's hard not to like the potential of toiling away in the world's most populous nation.
Synutra had a rough patch where it posted losses in 10 of 12 quarters, but it's back in winning form these days. Wall Street is banking on the third consecutive quarterly profit out of the company.
Finally we have Pier 1 Imports.
If you go back 39 months, the retailer of imported home furnishings was on the brink of being a broken home. The stock traded for as little as $0.10, and cynics figured that the chain would be the next major retailer to file for bankruptcy.
Well, reality turned out to be far kinder. Sales began to pick back up, and its ugly streak of quarterly deficits disappeared. Pier 1 has now come through with 10 quarters of positive earnings.
The good news should continue. Analysts figure that Pier 1's profitability will improve by 33% 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 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.Motley Fool newsletter serviceshave recommended buying shares of FactSet Research Systems. The Motley Fool has adisclosure policy. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. Try any of our Foolish newsletter servicesfree for 30 days.
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