The economy is showing signs of fumbling the recovery.
Greece is teetering. Protestors are disrupting annual meetings. At least one tech giant is laying off 27,000 workers.
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
|Lions Gate (NYSE: LGF )||$0.26||$0.33||Add|
|Yingli Green Energy (NYSE: YGE )||($0.21)||$0.35||Add|
|OmniVision (Nasdaq: OVTI )||$0.22||$0.66||Add|
|RealD (NYSE: RLD )||($0.07)||$0.08||Add|
|DryShips (Nasdaq: DRYS )||($0.02)||$0.15||Add|
Source: Thomson Reuters.
Clearing the table
Let's start at the top with Lions Gate Entertainment.
Didn't the movie studio have a monster hit in The Hunger Games this quarter? Didn't Katniss rock a mean bow? Well, the problem here is a matter of revenue recognition. Obviously all of a hit movie's revenue isn't booked right away.
The real money for Lions Gate will be made through the course of fiscal 2013, which began last month. Analysts see a profit of $1.29 a share for the entire year, well above the modest profit that the pros are targeting for fiscal 2012.
Yingli is the latest in the long line of solar energy companies that were profitable a year ago but are losing money these days. Wall Street's banking on a deficit of $0.21 a share out of Yingli. It won't come as a surprise to investors, and not just because of all of the larger solar stocks that have fallen in recent weeks. After a profitable run, Yingli has served up meaty losses in its two previous quarters.
OmniVision Technologies was a market darling a few years ago. The leading provider of image sensors was feasting as smartphone and laptop manufacturers were improving their products with cameras that actually take decent snapshots and video clips.
OmniVision is still a leader, but the market has gotten very competitive lately. Analysts see OmniVision earning just a third of what it did a year earlier on a nearly 21% decline in revenue.
RealD is a leading outfitter of 3-D screens. There's life at the multiplex again after a terrible 2011, but Wall Street's still betting on seeing the first quarterly deficit out of RealD in more than a year.
Naturally there will be some skepticism about the faddish nature of 3-D movies, but studios and movie audiences are showing no signs of backing away from paying a premium for 3-D screenings anytime soon.
DryShips watches over its fleet of dry bulk carriers and tankers. The fact that the company happens to be Greek is obviously drawing a fair deal of attention these days, but the only reason that it makes the cut in this list is because it was profitable a year ago. Analysts don't see it that way this quarter.
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.
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