3 Earnings Reports That Caught My Attention Last Week

The first half of 2012 is now in the books, and the majority of earnings reports have been better than expected. With so many companies reporting during the weeks that comprise earnings season, it's easy for some earnings reports to fall through the cracks.

Each week this year, I've taken a look at three companies that could be worth further research after either beating or missing their profit expectations. Today, we'll take a gander at three more companies that reported earnings last week. They may have slid under your radar, but they deserve a look:

Company

Consensus EPS

Reported EPS

Surprise

Schnitzer Steel (Nasdaq: SCHN  ) $0.25 $0.40 60%
Nike (NYSE: NKE  ) $1.37 $1.17 (15%)
Research In Motion (Nasdaq: RIMM  ) ($0.04) ($0.37) (825%)

Source: Yahoo! Finance.

Schnitzer Steel
It appears that a case of the "less bad" rally has migrated beyond just the homebuilding sector and has found its way into the metals sector.

Schnitzer Steel, a ferrous and non-ferrous metal recycling company, reported a nearly two-third decline in profits to $0.40 per share as sales contracted 10%. Although EPS beat Wall Street's reduced estimates, there doesn't seem to be much relief in sight for metal recyclers in general. During the quarter, Schnitzer saw the average price for non-ferrous metals drop to $0.97 from $1.12. Thankfully, ferrous metals make up the majority of sales, but it nonetheless demonstrates further what little pricing power recycling companies possess at the moment.

One sneakier way to get into the recycling sector while still staying diversified is to look at the waste management sector, or specifically at Waste Management (NYSE: WM  ) . Even if Waste Management's recycling segment is struggling with lower prices, it has its renewable energy operations and the stability of its waste collection services to fall back on.

This might seem like a victory for Schnitzer shareholders, but there could be plenty of downside to come if pricing doesn't improve.

Nike
Don't blink, because if you do, you may miss the footwear sector turning on a dime.

For months now, footwear, like much of the retail sector, has been on fire. Warm weather propagated robust shoe sales and consumers were fairly relaxed with their discretionary spending. However, with China's growth rate slowing and European debt fears being a drag on global financial markets, some international markets (ahem, China) are beginning to get saturated.

Nike's quarterly results fell a clean $0.20 per share shy of Wall Street's expectations and came as a surprise to many investors, including myself. But this isn't the first footwear stock to fall off a cliff when no one expected it. Warehouse footwear retailer DSW (NYSE: DSW  ) , which had boosted full-year EPS on a couple of occasions over the trailing-12-month period, gave a less-than-stellar second-quarter forecast in its latest report. DSW kept its full-year EPS forecast unchanged, but nonetheless pointed to more clearance items being sold and dragging down its margins.

This miss, though it might seem bad now, could be a good opportunity to dip your toes into Nike. The footwear giant has top-tier ambassadors to promote its brand image, strong pricing power, and a global presence. Plus, as my Foolish colleague Brian Pacampara points out, it could easily use some of its operating cash flow to repurchase shares in the future. This warning could wind up being a blessing in disguise for long-term investors.

Research In Motion
There are crashes, there are 60-car pile-ups in the fog, and then there's Research In Motion. Seriously, what in the heck was that?

Expectations for a poor quarter were mostly baked into the stock, with RIM's management hinting that layoffs and cost-cutting measures would be in the offing. No one, however, could have anticipated that RIM would be laying off 5,000 of its 17,000 employees and would report an operating loss of $518 million with sequential revenue down 33%!

RIM was often touted for its fast-paced growth, but it's actually contracting at an even faster pace than it grew in the first place! The company delayed the rollout of its BlackBerry 10 operating system (yet again) until 2013, which is important since it's possibly the only thing that can save the company from almost certain doom. Although RIM's cash situation improved marginally, with another loss forecast for next quarter, I'm not very hopeful that its $2.2 billion will last very long.

RIM's patent portfolio now may be its only saving grace, but given that it shares most of its patents with Apple and Microsoft, the chances of another party swooping in to buy RIM prior to a bankruptcy filing are dwindling by the day.

Foolish roundup
Sometimes an earnings beat or miss isn't as cut-and-dried as it appears. I've given my two cents on what's next for each of these companies -- now it's your turn to sound off. Share your thoughts in the comments section below, and consider adding these stocks to your free and personalized watchlist.

If you'd like the inside track on three more companies that could wind up in the earnings beat column, then I suggest you get a copy of our latest special report: "3 American Companies Set to Dominate the World." Did I mention the best part? This report is completely free, so don't miss out!

Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.

The Motley Fool owns shares of Microsoft and Apple. Motley Fool newsletter services have recommended buying shares of Waste Management, Nike, Microsoft, and Apple, as well as creating a bull call spread position in Microsoft and Apple. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy that always exceeds expectations.


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