It's not so bad out there.
The "sell in May" boo birds are starting to chirp, but equities are still holding up reasonably well.
I realize 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
|
| CommVault Systems (Nasdaq: CVLT ) |
$0.23 |
$0.21 |
Add |
| JA Solar (Nasdaq: JASO ) |
$0.32 |
$0.24 |
Add |
| KIT Digital (Nasdaq: KITD ) |
($0.08) |
($1.33) |
Add |
| Nuance (Nasdaq: NUAN ) |
$0.31 |
$0.28 |
Add |
| Disney (NYSE: DIS ) |
$0.56 |
$0.48 |
Add |
| Quepasa (AMEX: QPSA ) |
($0.13) |
($0.21) |
Add |
| Giant Interactive (NYSE: GA ) |
$0.14 |
$0.12 |
Add |
Source: Thomson Reuters.
Clearing the table
Let's start at the top with CommVault.
As a provider of enterprise software, CommVault excels in data management solutions. The $0.23 a share that the pros are targeting isn't much more than the $0.21 a share it rang up a year earlier, but at least CommVault is moving in the right direction.
JA Solar toils away in the volatile alternative energy market. Many solar plays require seatbelts and crash helmets, but JA Solar is consistently profitable. It also has a good track record against Wall Street. JA Solar has beaten analyst guesstimates by 22% or more in three of the past four quarters.
KIT Digital is a Czech company that helps a growing number of media and wireless giants manage their Web-based video assets. KIT is still losing money, but the deficits are narrowing substantially.
Nuance Communications specializes in voice recognition. If you've ever had to go through touchtone support after belting out "customer service" a few times, feel free to curse at Nuance and its peers. Nuance must be doing something right if it continues to grow. Arming companies with cost-effective ways to manage incoming calls can go a long way.
There's life after Hannah Montana for Disney. The family entertainment behemoth continues to crank out magnetic teen stars as if it's stashing away a teen idol factory somewhere. Advertisers are flocking back to ABC and ESPN. Families are also returning to its theme parks, though $4 gallons of gasoline may eat into its crucial summer travel season. CEO Rob Iger has done an impressive job in steering the media giant since taking the reins from Michael Eisner several years ago. It's a performance that will be on display once again when it reports what should be another quarter of improved profitability.
Quepasa watches over one of the few publicly traded social networks. Quepasa.com's emphasis is on Latinos. The site has been criticized for its advertiser concentration and lack of engagement, but it has been trying to improve its stickiness by making a bigger splash in social gaming within the site. Positive earnings have been elusive, but the red ink is narrowing.
Finally, we have Giant Interactive. Online gaming in China remains a growing industry, and many of its key players are trading at dirt-cheap multiples. Giant Interactive is fetching less than 15 times this year's projected income and 13 times next year's target. The gaming specialist hasn't been as steady as some of its larger peers, but it's moving in the right direction now.
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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