The economy is showing signs of fumbling the recovery.
Football fans may be cheering the return of real NFL referees, but you won't find too many people applauding the growing albatross of student loan debt.
A new Pew Research Center report shows that 19% of the country's households were carrying student debt in 2010, a big spike from 15% in 2007 and 9% in 1989. We're talking about 22.3 million homes here! The sums are also getting more burdensome, rising from $23,349 to $26,682 in just three years.
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
|Mosaic (NYSE: MOS )||$1.16||$1.17||Add|
|Monsanto (NYSE: MON )||($0.43)||($0.22)||Add|
|OCZ Technology (NYSE: OCZ )||($0.15)||($0.03)||Add|
|International Speedway (Nasdaq: ISCA )||$0.08||$0.24||Add|
|Constellation Brands (NYSE: STZ )||$0.54||$0.77||Add|
Source: Thomson Reuters.
Clearing the table
Let's start at the top with Mosaic.
Producing concentrated phosphate and potash crop nutrients would seem to be an all-weather business. Folks need to eat, and the agriculture industry should be getting a boost from emerging markets evolving to the point where they can bring more food to the table. Unfortunately for Mosaic, Wall Street's banking on a slight dip in profitability when the company reports on Tuesday.
Monsanto is another name that should be thriving in these pro-agriculture times. The agrichemical giant is providing farmers with the bioengineered seeds that yield heartier harvests. It also provides homeowners with the weed-killing chemicals to keep their lawns looking good.
Monsanto posting a loss when it reports on Wednesday isn't the end of the world. This is the company's seasonally weakest quarter. It has served up a deficit in its fiscal fourth quarter in five of the past six years. However, the $0.43 a share that analysts are targeting would be its largest quarterly loss in that time. More important for our purposes here, we're looking at roughly double the red ink that Monsanto harvested a year earlier.
OCZ Technology had a cruel summer. It lost both its CEO and its CFO, and the NAND memory shortage is weighing on its results. OCZ revealed earlier this month that it wasn't able to secure enough flash memory to build all of the solid-state drives that it was hoping to crank out. The warning stung the stock, and investors are already prepped for a bad quarterly report on Wednesday.
International Speedway is the motorsports promoter behind Daytona, Talladega, and other iconic speedways. This may seem to be a growing business, but you won't find that on the company's bottom line. Wall Street's banking on International Speedway earning just a third as much as it did a year earlier.
Finally, we have Constellation Brands. The premium wine and spirits giant behind Mondavi wines and imported Corona beers is expected to post a slight uptick in revenue, but margins and earnings apparently aren't raising a glass for that toast.
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 translate 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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