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)
|priceline.com (Nasdaq: PCLN )||$7.37||$5.49||Add|
|Nuance Communications (Nasdaq: NUAN )||$0.40||$0.35||Add|
|SodaStream (Nasdaq: SODA )||$0.46||$0.42||Add|
|Capstone Turbine (Nasdaq: CPST )||($0.02)||($0.03)||Add|
|Cedar Fair (NYSE: FUN )||$0.40||$0.09||Add|
Source: Thomson Reuters.
Clearing the table
Let's start at the top with priceline.com.
Priceline's been a market darling among travel portals for years. You have to go all the way back to 2006 to find the last time the dot-com overachiever didn't beat Wall Street's quarterly profit target.
Investors still can't assume that Priceline will come through with another blowout quarter. Most of the travel booking website's revenue originates outside of the U.S. these days, and the European economy continues to struggle. However, until Priceline is proven mortal, the smart money has to be on another beat by the company. Yes, it's cute that Priceline shares its estimated earnings figure -- $7.37 a share -- with an airplane, but it will probably earn even more than that.
Nuance Communications is a leader in voice recognition. A few years ago, most consumers associated this technology with annoying call centers. Frustrated callers would bellow, "Customer service!" as they navigated through a maze of telephone prompts. Now voice recognition has become a part of many smartphones, PCs, and other gadgets. Analysts see slight bottom-line improvement at Nuance, and understandably so.
SodaStream is the Isreali company behind the namesake machines that carbonate tap water. The company has been around for more than 100 years, but it has gained momentum since Daniel Birnbaum stepped up as CEO in 2006. Improved designs, potent marketing, and aggressive global expansion have delivered fizzy growth.
Growth is decelerating as SodaStream entrenches itself as the market leader around the world, but Wall Street still sees revenue climbing at a reasonable 17% clip when it serves up its latest quarterly results.
Capstone Turbine is expected to post a deficit of $0.02 per share when it reports on Thursday. The maker of microturbine energy systems has been posting narrowing losses as it closes in on profitability.
Finally, we have Cedar Fair eyeing a healthy pop in profitability. The operator of regional amusement parks, including Knott's Berry Farm in California and its flagship Cedar Point roller-coaster park in Ohio, is expected to generate a profit of $0.40 a share for the quarter that covers the beginning of its telltale summer season.
Income investors have been chasing Cedar Fair for years, given its meaty payouts. The current yield of 5.2% is certainly tempting. However, chunky distributions are possible only if a company is able to sustain or build on its profitability over time. Thankfully, Cedar Fair is doing exactly that.
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.