It may be Halloween this weekend, but the tricks and treats won't stop on Sunday. Companies will continue to report earnings next week, and it won't be all Kit Kat bars and Twizzlers.
What's in your bag? The way some companies will fumble their quarterly financials, I'm sure there'll be no shortage of Butterfingers.
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
|Cedar Fair (NYSE: FUN )||$1.66||$1.92|
|Electronic Arts (Nasdaq: ERTS )||($0.11)||$0.06|
|Archer Daniels Midland (NYSE: ADM )||$0.75||$0.77|
|NutriSystem (Nasdaq: NTRI )||$0.25||$0.27|
|Transocean (NYSE: RIG )||$1.36||$2.65|
|Coeur d'Alene Mines (NYSE: CDE )||$0.07||$0.15|
|ValueClick (Nasdaq: VCLK )||$0.14||$0.26|
Source: Thomson Reuters.
Clearing the table
There will be more companies posting lower earnings next week, but these are just a few of the names that really jump out at me.
Cedar Fair is the amusement park operator behind Cedar Point in Ohio, Knott's Berry Farm in California, and several other regional attractions. Cedar Fair was able to shake off a hostile takeover attempt by private-equity giant Apollo Global Management earlier this year. It was the right call, since the units are trading higher today, but shouldn't earnings be improving? This is the telltale summer report for a highly seasonal company. If the economy is in better shape now than it was a year ago, why are the turnstile clicks not turning into bottom-line growth?
Electronic Arts is slipping into the red. Remember when EA was on top of the world, and every release mattered? It's been a rough road for the company -- and the industry in general since early 2009. Uninspiring reviews for its Medal of Honor release won't factor into the report, because the battlefront game came out after the end of the quarter, but it will make it that much harder for EA to gain momentum off what appears to be a lost quarter.
Archer Daniels Midland is an agribusiness giant. Given the growing global demand for food, an agricultural enabler like AMD should be feasting at this table. Unfortunately, the pros see a slight dip in year-over-year earnings here.
NutriSystem is the weight management specialist, providing a chunky yield as it encourages thinner waistlines. After eight consecutive quarters of year-over-year dips in profitability, NutriSystem has rattled earnings growth in two of the past three periods. The pros see it returning to its losing ways with Monday's report.
Transocean is still going to be profitable, but the provider of offshore drilling services is only likely to earn about half of what it cranked out a year ago. Transocean commands the maximum five-star bullish rating on Motley Fool CAPS, even though margins peaked a couple of years ago.
Coeur d'Alene mines mostly for silver. It's one of the handful of stocks that have thrived after going through a reverse split, with Coeur's stock trading more than 40% higher after last year's 1-for-10 reverse. Since net income is projected to be roughly cut in half in its most recent quarter, it's not as if we can pin the tail of success on its fundamentals.
Finally, we have ValueClick. Aren't advertisers earmarking more of their marketing budgets to cyberspace campaigns? Why isn't ValueClick rolling in Big G money? ValueClick is a major player in display advertising and runs a popular platform for affiliate marketers. Sadly, earnings appear to be halved, and it's not just a matter of thinning margins. Analysts predict that revenue will take a 21% hit at ValueClick.
Why the long face, short-seller?
These seven 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.
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.