7 Reasons to Worry About Next Week

It's not a pretty world out there.

Several retailers are posting ho-hum sales, and is it any wonder? The number of folks applying for unemployment benefits clocked in at 422,000, too high to indicate that companies are actively hiring these days, while nonfarm payrolls rose just 54,000 last month.

It doesn't necessarily get any better when we turn our attention to Wall Street.  

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.

Company	Latest Quarter EPS (Estimated)	Year-Ago Quarter EPS	My Watchlist
Bob Evans (Nasdaq: BOBE  )	$0.66	$0.68	Add
Comtech   (Nasdaq: CMTL  )	$0.39	$0.67	Add
Hovnanian Enterprises (NYSE: HOV  )	($0.51)	($0.36)	Add
Talbots (NYSE: TLB  )	$0.04	$0.38	Add
Layne Christensen (Nasdaq: LAYN  )	$0.28	$0.34	Add
Shuffle Master (Nasdaq: SHFL  )	$0.14	$0.15	Add
J.M. Smucker (NYSE: SJM  )	$0.98	$0.99	Add

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 Bob Evans. The comfort food restaurant chain would seem to be an obvious beneficiary of consumers' longing to eat out. It's just not happening, and it's not as if Bob Evans serves up pricey cuisine.

Comtech offers communication solutions when conventional communications infrastructure either isn't available or feasible. Revenue and earnings slipped three months ago, as demand softened in its mobile data communications and RF microwave amplifiers segments. The pros see even steeper declines on the top and bottom lines this time around.

Hovnanian's losses aren't a surprise. It's a homebuilder. Why buy a new home when there are perfectly good foreclosed homes in better locations being practically given away in short sales?

It's hard to get excited about residential developers in general. The market dried up when the deadline for the homebuyer tax credit came and went last spring. Mortgage rates may be low, but prices will need to get even lower to smoke out buyers. As you can imagine, this is bad news for homebuilders with fixed building costs.

Talbots is a struggling retailer with what some believe is an overpaid CEO. The chain is in the middle of a makeover that will update its concept while shuttering dozens of stores. This isn't an excuse, though. Retailers should be holding up better.

Layne Christensen may sound like a high-end retailer, but it's far from it. Layne Christensen gets down and dirty by providing drilling and construction services for the wastewater infrastructure and mineral exploration markets. This may seem like an all-weather niche, but it's apparently not this time around.

Shuffle Master gets its name from its automatic card shufflers but it also makes other gaming equipment. This would seem to be a good time to be Shuffle Master. Casinos are opening in Macau and other overseas markets. More states are likely to get lax on anti-gambling legislation to help eat into their budgetary shortfalls. Unfortunately, it's just not materializing on Shuffle Master's bottom line.

Finally, we have J.M. Smucker. A spike in coffee prices is giving the food giant flexibility in hiking its Folgers prices, and who doesn't love the company's namesake jellies?

Analysts see J.M. Smucker earning $0.98 a share when it reports next Thursday, just short of the $0.99 a share it posted a year earlier. But don't be surprised if Smucker actually improves on last year's results. It has landed ahead of Wall Street profit projections in 11 consecutive quarters.

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.