4 Companies Going the Wrong Way This Earnings Season

Bloomberg / Getty Images

It's earnings season, and investors aren't likely to see much that impresses them.

The S&P 500 may have hit fresh all-time highs earlier this month, but the fundamentals of some of its components aren't so rosy. Net income for S&P 500 companies is expected to climb only 1.5 percent for the quarter, according to earnings estimate tracker Thomson Reuters.

Let's go over a few of the prolific companies that are widely expected to post lower quarterly earnings than they did a year earlier. Some of the names may surprise you.

Apple (AAPL)

The world's appetite for iPads and iPhones remains strong, but Apple just isn't making as much money on its iGadgetry as it used to. Consumers are going for cheaper iPad mini tablets and opting for older iPhone 4 and iPhone 4S smartphones that retail for as much as $200 less than the latest iPhone 5.

The end result has been a trend-breaking dip: For the first time in 10 years, Apple is projected to post a decline in year-over-year profitability. Wall Street's bracing for earnings per share to slip 18 percent to $10.23, even though they still foresee a modest uptick in revenue.

The onus is now on Apple to create the next "must have" gadget that it can sell at a healthy markup. That won't be easy, but now you know why Apple's stock has taken a 40 percent tumble since it hit its peak last September.

Amazon.com (AMZN)

The leading online retailer makes no bones about its emphasis on long-term customer satisfaction over short-term profitability. "We are internally driven to improve our services, adding benefits and features, before we have to," CEO Jeff Bezos wrote in last week's annual letter to shareholders. "We lower prices and increase value for customers before we have to. We invent before we have to."

Sponsored Links

A customer-centric approach is naturally appreciated by shoppers who are getting more bang for their buck at Amazon. But it's a bit surprising that shareholders haven't had a problem sending the stock higher considering Amazon's uninspiring bottom-line results.

In fact, Amazon has come up short on the bottom line relative to Wall Street expectations for three straight quarters. This sort of performance can easily take a heavy toll on a stock, but Amazon has trained the market well. Analysts see Amazon earning just a third as much as it did a year earlier, and Wall Street's cool with that for now.

Caterpillar (CAT)

To all appearances, this should be a booming time for the construction industry. Residential and commercial real estate are on the rise, and emerging markets hungry for resources would seem to be ripe for Caterpillar's construction and mining equipment.

Unfortunately, it's just not playing out that way.

Caterpillar posted declining profitability three months ago, and that's exactly what analysts are predicting for Caterpillar's next three quarters. Caterpillar's next report -- ironically enough coming up on April 22 -- Earth Day -- should shed some more light on the situation. Analysts see sharply lower earnings for the entire year on a slight dip in revenue.

Staples (SPLS)

Corporate America is supposedly showing signs of life. Why isn't the leading office supply chain getting energized as well?

Analysts see Staples posting a 10 percent decline in profitability on a 3 percent slide in sales for the quarter ending this month. The retailer of printer cartridges, task chairs, and all things office has an excuse. Business has been lousy in Europe, where austerity-encumbered economies aren't experiencing the bounce that the United States has been experiencing.

It's still an ugly snapshot for a company that has historically served as the pulse for small and mid-sized businesses.

Motley Fool contributor Rick Munarriz has no position in any stocks mentioned. The Motley Fool recommends Amazon.com and Apple. The Motley Fool owns shares of Amazon.com, Apple, and Staples. Try any of our newsletter services free for 30 days.