5 Reasons Not to Worry This Week

It's not a perfect world out there for investors, but things may be starting to get better.

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.

Company

Latest-Quarter EPS (estimated)

Year-Ago Quarter EPS

MannKind (NASDAQ: MNKD  )

($0.18)

($0.30)

Level 3 Communications (NYSE: LVLT  )

($0.18)

($1.15)

NVIDIA (NASDAQ: NVDA  )

$0.24

$0.19

CenturyLink (NYSE: CTL  )

$0.68

$0.58

The Active Network (NYSE: ACTV  )

($0.11)

($0.13)

Source: Thomson Reuters.

Clearing the table
Let's start at the top with MannKind. Diabetes sufferers tired of needle pricks have been rooting for MannKind for a long time, but the company continues to bump into setbacks as it tries to get its inhalable insulin on the market. Afrezza could be a game changer, and that potential has made MannKind a volatile investment.

MannKind reports today after the market close. Profitability will have to wait, but at least Wall Street's holding out for a much narrower deficit this time around.

Level 3 is another company making the cut this week on the strong likelihood of posting a substantially smaller loss this quarter. Shares of the provider of enterprise communication solutions took a beating last time out. Level 3 served up a larger deficit than the pros were forecasting. This isn't a new development. Level 3 has been losing more money than analysts are targeting in every single quarter over the past year. In other words, it wouldn't be a shock if Level 3 winds up with a bigger shortfall than the $0.18 a share that the market is currently expecting. However, after $1.15 a share in red ink a year earlier, it will be a shock if Level 3 doesn't post some year-over-year improvement in tomorrow's report.

NVIDIA is the graphics chip behemoth with the corporate moniker that translates into "envy" in Spanish. Investors are probably feeling pretty envious of other tech stock owners. Despite posting back-to-back quarters of market-thumping results, sporting a reasonable 2.4% yield, and gaining ground in the tablets and smartphones that have been eating at its bread-and-butter PC graphics business, the stock is trading far closer to its 52-week low than its high.

CenturyLink joins NVIDIA in reporting on Wednesday. Even though the company is expected to post a slight dip in revenue, the consensus estimate calls for profitability per share to climb 17% higher. Investors probably shouldn't be fooled by the uptick. Regional telcos have been generally struggling to provide Internet connectivity and offer bundled services to offset the decline in landline services.

CenturyLink's quarter may not look so bad, but analysts see the company posting a slight decline in revenue and earnings here in 2013.

Finally, we have The Active Network. Endurance running is catching on, and The Active Network is leading the race. A year ago my wife started to train for a half marathon, and that meant joining a running group and working her way through a few 5K runs along the way. Her goal culminated last month when she completed the ING Marathon in Miami.

Along the way she has run into plenty of online registrations powered by Active.com. It was The Active Network's widely followed "couch to 5K" plan that got her started after watching our son complete his first half marathon last year.

There are plenty of people out there in my wife's running shoes, and The Active Network has been able to deliver modest growth as folks trade in passive lifestyles for more active ones. It also doesn't hurt that so many organizations have turned to 5K events as fitness-minded fundraisers. The problem for The Active Network is that it has struggled with profitability. Pushing its registration model into other applications -- from sporting league to corporate conference registrations -- is logical but it doesn't always come cheap.

Analysts see a deficit of $0.11 a share when The Active Network reaches its quarterly finish line 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.

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  • Report this Comment On February 11, 2013, at 10:55 AM, WCoastGuynCA wrote:

    Expect Mannkind's operating losses to increase in the recent quarter as the company is incurring additional costs due to the ongoing phase three trialq for Afrezza.

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