It's not a perfect world out there for investors.
The news was grim Friday on the employment front. Yes, the unemployment rate slipped from 8.3% to 8.1% in August, but there's more to the numbers than just that. Nonfarm payrolls increased by a lower-than-expected 96,000, and nearly four times as many people stopped looking for work.
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)
|Shuffle Master (Nasdaq: SHFL )||$0.20||$0.17||Add|
|Pall (NYSE: PLL )||$0.77||$0.76||Add|
|K12 (NYSE: LRN )||($0.03)||($0.08)||Add|
|Pier 1 Imports (NYSE: PIR )||$0.19||$0.14||Add|
|Palo Alto Networks (NYSE: PANW )||$0||($0.42)||Add|
Source: Thomson Reuters.
Clearing the table
Let's start at the top with Shuffle Master.
The company makes card-shuffling equipment and other gaming gear. The growing global popularity of casinos has been opening up expansion opportunities, and Shuffle Master is there with the automatic card shufflers and other gambling essentials.
Pall provides fluid management solutions, but we can't say that its recent quarters have gone smoothly. Pall has actually missed Wall Street estimates in three of the past four quarters, and that bears noting when it reports on Wednesday.
Analysts see Pall earning $0.77 a share -- barely above the $0.76 a share it rang up a year earlier. If it misses -- just as it has in all but one quarter over the past year -- we may be looking at a decline in year-over-year profitability.
K12 has been helping provide cost-effective education solutions through its Web-savvy curriculums and online education programs. Don't confuse K12 with the University of Phoenix and the other post-secondary for-profit educators that are struggling these days. Just as its name implies, K12 focuses strictly on the grade-school level.
Yes, Wall Street feels that K12 will post a quarterly deficit -- its first use of red ink after three straight profitable periods -- but it should be a much narrower loss than what it posted a year earlier.
Pier 1 runs sells home furnishings in strip malls through its namesake stores. Pier 1 seemed like a lousy bet three years ago when the real-estate market was in freefall. Folks were losing their homes, giving them fewer reasons to dress up their digs. The stock traded as low as $0.10 in March of that year, but the stock has gone on to be one of Wall Street's biggest winners since then.
Finally, we have Palo Alto Networks reporting its first quarterly report as a public company. Palo Alto went public at $42 three months ago. The networking security specialist posted a large deficit during the same fiscal fourth quarter a year earlier, but analysts are holding out for breakeven results this time around.
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 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.