The market hasn't been as flat as Butler's shooting performance during the NCAA hoops final on Monday, but it appears to be equally heavy on the bracket-busting hype.
Sure, retailers appear to be reporting better than expected March sales metrics this week, but why are there still some companies out there that are going the wrong way?
Let's go over a few of the companies where analysts see the arrows pointing down on the bottom line next week when they step up with their quarterly results. Some of the names may surprise you.
Latest Quarter EPS
|Universal Forest (Nasdaq: UFPI )||$0.01||$0.05||Add|
|Joe's Jeans (Nasdaq: JOEZ )||$0.00||$0.01||Add|
|Christopher & Banks (NYSE: CBK )||($0.48)||($0.13)||Add|
|Cubist (Nasdaq: CBST )||$0.28||$0.36||Add|
|Hasbro (Nasdaq: HAS )||$0.17||$0.26||Add|
|Mattel (Nasdaq: MAT )||$0.05||$0.07||Add|
|SUPERVALU (NYSE: SVU )||$0.34||$0.62||Add|
Source: Thomson Reuters.
Clearing the table
There will probably be other companies posting lower earnings next week, but these are just a few of the names that really jump out at me.
Universal Forest Products is in demand. The company behind retail wood furniture, structural lumber products for the manufactured housing industry, and engineered wood components had a strong 2010 if we don't go beyond the top line. Sales climbed 13% last year, with growth in all three of its market segments. However, earnings did slip in 2010, and analysts see more of the same next week.
Joe's Jeans became a speculator's darling for a spell last year. Investors grew fascinated with the premium denim retailer's stellar comps and popularity with tastemaker celebrities. It didn't last. Wholesale margins slipped, and store openings in outlet centers forced investors to reassess if Joe's Jeans' high-end apparel really is as upscale as they once believed.
At least Joe's Jeans is barely breaking even. Fellow apparel retailer Christopher & Banks is expected to post a dramatically wider loss for its holiday quarter. The pros are also banking on a deficit for the fiscal year ahead. Income investors flocking to the stock for its meaty 3.8% yield will want to keep an eye on the red ink. It may not be sustainable if the bottom line keeps dipping into the red.
Cubist Pharmaceuticals struck a deal to market a new antibiotic this week. It also struck a licensing deal for a generic version of its only approved product. These are clearly positive developments, but it won't help the lack of earnings growth lagging in the rearview mirror.
Hasbro and Mattel are the country's two largest toy manufacturers. Shouldn't the makers of popular playthings be rocking right now? Parents supposedly have a little more disposable income to treat their kids to a new toy or board game.
Hasbro did close 2010 on a sour note. Some slides were easy to see coming. It wasn't going to move as many Transformers and G.I. Joe toys as it did a year earlier, since both properties had big theatrical releases during the summer of 2009. However, the 22% decline in its prominent games and puzzles category did leave bulls scratching their horns.
Finally, we have SUPERVALU. Grocers are supposed to be all-weather investments, but it's been a rocky run for some players as they tackle escalating food costs and overhead juggling. SUPERVALU has also come in below Wall Street's profit targets during the past two quarters, so don't be surprised if it earns less than half of what it did a year earlier.
Why the long face, short-seller?
These reports aren't likely to be pretty, but there's still room for glimmers of optimism within the pessimism.
Investors are already braced for the worst with these reports. If there is an upside to this grim list, it's that lower profitability is already baked into next week's reports. It actually opens the door for unexpected surprises.
The more I think about it, the less worried I become.