Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



5 Reasons to Worry About Next Week

Don't let it get away!

Keep track of the stocks that matter to you.

Help yourself with the Fool's FREE and easy new watchlist service today.

We're just dipping our toes into earnings season. Why is the water so cold?

The economy is showing signs of fumbling the recovery. Initial jobless claims clocked in higher than economists were expecting. The United Kingdom technically slipped into a double-dip recession.

It's not just iffy news at the macro level.

There are more than a few companies that aren't pulling their own weight in this supposed economic recovery.

There are still plenty of names posting lower earnings than they did a year ago. Let's go over a few of the companies that are expected to go the wrong way on the bottom line next week.


Latest-Quarter EPS (Estimated)

Year-Ago Quarter EPS

My Watchlist (Nasdaq: SOHU  ) $0.47 $1.01 Add
Avon Products (NYSE: AVP  ) $0.28 $0.37 Add
Acme Packet (Nasdaq: APKT  ) $0.17 $0.27 Add
Garmin (Nasdaq: GRMN  ) $0.41 $0.43 Add
World Wrestling (NYSE: WWE  ) $0.07 $0.11 Add

Source: Thomson Reuters.

Clearing the table
Let's start at the top with

One of China's leading Internet portals, Sohu also operates a fast-growing search engine and video website. The dot-com darling also has a majority stake in one of the country's larger online gaming companies.

Business isn't necessarily declining for the company. In fact, analysts see revenue climbing nearly 30% when the company reports on Monday morning. The rub here is diminishing margins.

Investors will also want to pay close attention to Sohu's guidance. The world's most populous nation has already gone public with lower economic growth targets than what the country has experienced in recent years, and earlier this week China's top search engine posted softer-than-expected revenue growth and guidance calling for decelerating top-line growth.

Avon Products is a bit of a drama queen these days. The direct marketer of cosmetics let its CEO go, and earlier this month became buyout bait when Coty stepped up with an unsolicited offer that was ultimately rebuffed.

The departure of controversial CEO Andrea Jung became official earlier this week after Sherilyn McCoy took the helm on Monday. Jung had the distinction of being the first female CEO in Avon's 126-year history, but she also attracted the wrong kind of attention when stateside sales started to slip and allegations of bribery to foreign officials surfaced.

Acme Packet's session border controllers are essential in making crisp and reliable Web-based phone calls. Unfortunately, it's disconnecting on the bottom line. If you want more bad news, Acme Packet has actually come up short against Wall Street's profit targets in the past two quarters. It's not the trend that investors like to see heading into a report next Wednesday where the pros already see Acme Packet taking a 37% hit.

Garmin is the GPS giant that's starting to find its way. The market's braced for a slight dip in profitability, but Garmin has delivered back-to-back quarters of trouncing analyst estimates by better than 40%. Just as the Acme Packet trend is problematic, investors paying attention won't be surprised if Garmin actually bucks the trend from this list of companies and actually finds a way to deliver bottom-line growth.

Finally we have World Wrestling Entertainment. The 6.1% yield may be rewarding patient investors, but the over-the-top wrestling champ has been consistently missing analyst income projections over the past year.

Why the long face, short-seller?
These 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. Lower earnings translates into higher earnings multiples, and nobody wants to see that happen.

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.

If five reasons to worry aren't enough, let's make your future No.6. There's a single shocking truth about your retirement that you may not know. It's part of a free report that won't be around forever, so check it out now.

Motley Fool newsletter services have recommended buying shares of Acme Packet and The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.

Longtime Fool contributor Rick Munarriz calls them as he sees them. He does not own shares in any of the stocks in this story. Rick is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.

Read/Post Comments (0) | Recommend This Article (3)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 1873136, ~/Articles/ArticleHandler.aspx, 10/26/2016 3:22:08 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated Moments ago Sponsored by:
DOW 18,204.09 34.82 0.19%
S&P 500 2,138.59 -4.57 -0.21%
NASD 5,250.79 -32.61 -0.62%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

12/31/1969 7:00 PM
APKT.DL $0.00 Down +0.00 +0.00%
Acme Packet CAPS Rating: ***
AVP $6.85 Down -0.05 -0.65%
Avon Products CAPS Rating: **
GRMN $49.88 Up +0.37 +0.75%
Garmin CAPS Rating: **
SOHU $39.35 Up +0.42 +1.08% CAPS Rating: ***
WWE $19.25 Down -0.21 -1.08%
World Wrestling En… CAPS Rating: **