It's not a perfect world out there for investors.
I recently went over some of the companies that are expected to post lower quarterly profits when they report this week.
Thankfully, they're the exceptions and not the rule. Let's go over some publicly traded companies that are expected to stand tall this week by posting year-over-year improvement on the bottom line.
Latest-Quarter EPS (estimated)
|TIBCO Software (Nasdaq: TIBX )||$0.23||$0.21||Add|
|Lennar (NYSE: LEN )||$0.17||$0.07||Add|
|KB Home (NYSE: KBH )||($0.34)||($0.89)||Add|
|Nike (NYSE: NKE )||$1.37||$1.24||Add|
|Smith & Wesson (Nasdaq: SWHC )||$0.16||$0.15||Add|
Source: Thomson Reuters.
Clearing the table
Let's start at the top with TIBCO Software.
TIBCO makes a wide range of enterprise software products. Its tibbr platform is an enterprise social-networking software that's attracting investor attention after Yammer's recent acquisition. TIBCO's Spotfire offers data visualization and predictive analytics. TIBCO Silver allows companies to set up their own cloud platforms.
You get the point. TIBCO is busy providing software solutions to corporations.
Analysts see TIBCO's profitability growing in the single digits, but it's important to notice how Wall Street has consistently erred on the side of being too conservative here. TIBCO has beaten profit targets -- by as little as 5% and as much as 20% -- over the past year.
Lennar and KB Home are homebuilders. Sure, this hasn't been a pretty place to be since the real-estate market crashed a few years ago. The biggest contributor to the sharp decline in average net worth in this country is the cascading home prices.
Well, there are some signs indicating that housing prices are starting to bottom out. There has even been a recovery in some of the hardest-hit markets. When a report surfaces indicating that it's cheaper to buy than to rent in most major cities, it's easy to believe that a turnaround is on the way. Having historically low mortgage rates is a major reason for that, of course.
Lennar and KB Home are both expected to post bottom-line improvement, though it means a different thing to each company. Lennar's profitability is expected to more than double when it reports on Wednesday. KB Home -- a developer that has posted losses in 14 of the past 16 quarters -- is merely expected to post a narrowing deficit on Friday.
Nike is in a good place. The athletic footwear and apparel giant hasn't been able to make enough of its Nike FuelBand high-tech performance tracking wristbands to meet consumer demand. Given Nike's many endorsement deals in the NBA, it's also worth noting that the NBA Finals were drawing a 6% uptick in ratings through the series' conclusion on Thursday. In other words, fans ultimately forgave the lockout-shortened season.
The global recession is a concern, naturally. Nike's shoes and clothes aren't cheap, so the ability for consumers to shell out big bucks for signature footwear or performance apparel matters. However, analysts still see the sultan of swoosh earning more money this time around.
Finally, we have Smith & Wesson. For a gun maker, election years are always interesting. Consumers may either buy more weaponry or snap up less, depending on how they expect the policies of the presidential candidates to play out. For now, the market's forecasting a slight improvement in earnings when Smith & Wesson reports on Thursday.
Cross those fingers, but know the fundamentals
Investors in these five stocks have a right to be excited. They are all improving their financial situations. They are worthy of the gains that the market rally has bestowed upon them over the past year.
I wouldn't be uncomfortable owning any of these companies. They're doing the right thing, regardless of Mr. Market's mood swings. The expectations may be high, but these five stocks wouldn't have it any other way.