Sat, 18/12/2010 - 10:48 by Rick Aristotle ...
We may be heading into a holiday-abridged trading week, but it doesn't mean that corporate earnings are going home for the holidays. In fact, stick around and you're find that more than a few companies are about to leave some serious lumps of coal in the stockings of shareholders.
Despite the heady market gains in recent weeks, 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.
Latest Quarter's EPS (Estimated)
Year-Ago Quarter's EPS
|ConAgra (NYSE: CAG)||$0.45||$0.52|
|American Greetings (NYSE:AM)||$0.71||$0.75|
|Lindsay (NYSE: LNN)||$0.49||$0.53|
|Cintas (Nasdaq: CTAS)||$0.38||$0.39|
|FSI International (Nasdaq:FSII)||($0.09)||$0.00|
|Navistar (NYSE: NAV)||$0.60||$1.99|
|Christopher & Banks (NYSE:CBK)||($0.06)||$0.19|
Source: Thomson Reuters.
Clearing the table
There will likely be more companies posting lower earnings next week, but these are just a few of the names that really jump out at me.
Let's start with ConAgra. The food giant behind Hunt's ketchup, Healthy Choice entrees, and Hebrew National hot dogs isn't growing as one would expect for a brand behemoth in an improving economy.
The chances aren't also too bright for ConAgra to defy Wall Street by posting higher net income. ConAgra has actually missed analyst targets in each of the two previous quarters.
American Greetings makes sense. Who is still sending out paper greeting cards and loading up on stationary items in these e-centric times? If anything, the real surprise is that it's actually earning as much as $0.71 a share in its latest quarter. Then again, that may be too good to be true since American Greetings has also come up short on the bottom line in its two previous quarters. The pros may still be overshooting reality here.
Lindsay is also coming up dry. This wouldn't be a big deal for the agricultural irrigation specialist, but Lindsay did just boost its dividend this summer. Higher payouts and lower income are an ugly combination.
Cintas has the same problem. The corporate uniform giant has been jacking up its annual distribution every year since going public in 1983. It can't keep its enviable 28-year streak going if earnings aren't growing. Besides, we're supposedly in an improving climate. If the private sector is hiring again, why isn't Cintas hopping on the bandwagon?
FSI makes cleaning products for the microelectronics industry. Investors with a historical perspective may argue that analysts also thought that FSI would post a loss during the same quarter a year earlier. It cleaned up nicely, delivering breakeven results. Will history repeat? I wouldn't bet on it. The pros were looking for a much smaller loss a year earlier.
Navistar makes commercial vehicles and parts for trucks and trailers. The company should be trucking along these days, but analysts see Navistar earning less than a third of what it did last year when big-ticket vehicles had began moving again.
Finally, we have Christopher & Banks. The retailer of women's apparel has been posting losses during even-numbered fiscal quarters and profits during odd-numbered fiscal quarters for two years now. What's that? Wall Street is braced for a deficit during the company's fiscal third quarter? Well, so much for that trend. It's a shame it had to tip over in this direction.
Why the long face, short seller?
These seven companies have literally 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.
© 2010 UCLICK L.L.C.