It's not so bad out there.
Factories are coming off their ninth consecutive month of increased production. Outside of the pesky -- and volatile -- food and energy prices, inflation appears to be held in check.
I realize that I can be a worrywart. I singled out several companies over the weekend projected to post lower earnings this week than they did a year earlier. Thankfully, that's just one side of the story.
There's more good news than bad news on the earnings front. Between recessionary cost-cutting and general improvement from last year's depressed levels, several companies are in better shape now than they were a year ago.
Let's go over seven companies that analysts see posting healthier bottom lines this week.
|
Company
|
Latest Quarter EPS (Estimated)
|
Year-Ago Quarter EPS
|
My
Watchlist
|
| Harley-Davidson (NYSE: HOG ) |
$0.53 |
$0.29 |
Add |
| Intuitive Surgical (Nasdaq: ISRG ) |
$2.49 |
$2.12 |
Add |
| VMware (NYSE: VMW ) |
$0.42 |
$0.32 |
Add |
| E*TRADE (Nasdaq: ETFC ) |
$0.12 |
($0.25) |
Add |
| Freeport-McMoRan (NYSE: FCX ) |
$1.24 |
$1.03 |
Add |
| General Electric (NYSE: GE ) |
$0.28 |
$0.21 |
Add |
| SanDisk (Nasdaq: SNDK ) |
$0.99 |
$0.95 |
Add |
Source: Thomson Reuters.
Clearing the table
Let's start at the top with Harley-Davidson.
Raymond James upgraded shares of the motorcycle icon last week, slapping it with a $50 price target. The analyst is encouraged by recent channel checks at Harley dealers. They must've been glowing since Wall Street is already braced for an 83% spike in profitability.
Intuitive Surgical is the company behind the da Vinci surgical robotics system that has been revolutionizing many operating procedures. The product is a winner. The only setback has been the concern that cash-strapped hospitals won't have the means to bankroll the technology making the operating room more efficient and reducing surgeon fatigue.
VMware is the poster child of virtualization software. Companies are drawn to VMware's ability to pool servers, optimizing excess capacity. The allure of doing more with fewer servers may seem like an all-weather winner, but VMware did stumble a bit on the bottom line during the darkest recessionary stretches. It's certainly not that way anymore, as the pros see VMware positing its fifth consecutive quarter of year-over-year improvement.
E*TRADE is the Web-based discounter that made talking babies cool again. The return of individual investors and sector consolidation are helping the brokerage industry, but it's also being challenged by cutthroat commission schedules and low interest rates. The good news for E*TRADE is that it's expected to reverse a year-ago deficit with a profit.
Freeport-McMoRan is the copper producer that also does some dabbling in gold. The shares were challenged last week after an analyst noted froth on the commodities front. Analysts have talked down Freeport-McMoran's near-term profit targets in recent days, but it's still mining in the right direction.
General Electric is the global conglomerate that continues to take heat for cashing in on a $3.2 billion tax refund despite being substantially profitable. Wall Street is banking on earnings improvement that looks more like a football score -- $0.28 a share vs. $0.21 a share -- but you can be sure that they'll be paying close attention to GE's tax situation just before hitting the bottom line.
Finally, we have SanDisk. The leading maker of flash memory continues to make the most of data storage going from chunky hard drives to smaller and more portable flash products.
Cross those fingers, but know the fundamentals
These aren't the only companies expected to post year-over-year gains this week. Several companies have either found ways to grow during the recession or have simply cut enough corners to show improvement on the bottom line.
This doesn't mean that investors can rest easy. The bad news here is that these companies are expected to post improving results. The optimism is already baked into their share prices. It makes it easier for them to slip, but why begin worrying about the companies that we aren't supposed to be worrying about?
If analysts are doing a good job modeling their profit targets, we'll be just fine.
Which of the many earnings report due out this week are you looking forward to? Share your enthusiasm in the comment box below.
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