We've been through a wild month of fear and loathing, but most of the ruckus is taking place either in the Gulf of Mexico or further out overseas. The U.S. economy, for once, seems calm in comparison. There was even robust housing news, and that sector seemed as if it would never bounce back.
Be careful, though. Even as the economy shows signs of life, plenty of companies are still posting lower earnings than they did a year ago. Let's go over a few of the pretenders that are expected to go the wrong way on the bottom line next week.
|
Company
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Latest Quarter's EPS (Estimated)
|
Year-Ago Quarter's EPS
|
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Lions Gate (NYSE: LGF )
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($0.26)
|
($0.25)
|
|
Shanda Interactive (Nasdaq: SNDA )
|
$0.65
|
$0.77
|
|
China Finance Online (Nasdaq: JRJC )
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($0.03)
|
($0.01)
|
|
Joy Global (Nasdaq: JOYG )
|
$0.77
|
$1.17
|
|
Quiksilver (NYSE: ZQK )
|
$0.03
|
$0.05
|
|
Sonic Solutions (Nasdaq: SNIC )
|
($0.01)
|
$0.01
|
|
DynCorp (NYSE: DCP )
|
$0.32
|
$0.34
|
Source: Yahoo! Finance.
Clearing the table
More companies than this will post lower earnings next week, but these are a few of the names that really jump out at me.
Let's start with Lions Gate. The movie studio seems to be the latest target of activist billionaire Carl Icahn, as the two sides trade volleys concerning a hostile takeover bid. If content is king, it's easy to see why Icahn is warming up to Lions Gate. This is the studio behind the Saw series of gross-out films that seem to pop up every October. Cable television's popular Mad Men is also Lions Gate's handiwork. Unfortunately, Lions Gate is posting losses -- and widening ones at that.
Shanda Interactive is one of the original players in China's high-margin online-gaming industry. This has been a booming sector, despite Internet cafe crackdowns and the country's tight policing of in-game content. Things have been slowing lately, and a couple of Shanda's peers posted uninspiring quarterly results last week.
China Finance Online also toils away in the world's most populous nation, but CFO's specialty is stock-market research for individual investors. The number of premium subscribers has been relatively stagnant in recent quarters. Trading volatility hasn't drummed up interest in edge-gaining due diligence, but it also hasn't scared away investors.
Joy Global makes mining equipment. Commodity excavation never seems to go out of style, given the percolating state of emerging markets. And sure enough, Joy Global has beaten Wall Street's expectations in each of the seven previous quarters. However, it's going to take a huge win to deliver anything close to the $1.17 a share in net income that the company posted a year ago.
Surf and skate apparel specialist Quiksilver is riding a pretty good wave these days. The stock took off after its most recent quarterly report. If you think 2010 has been a ho-hum year for your portfolio, check out Quicksilver: The stock has more than doubled year-to-date. That kind of torrid performance would seem to indicate monstrous growth, but Quiksilver isn't on this list by accident. Analysts are targeting lower earnings here, too.
Sonic Solutions is a digital-media company that's posted three consecutive quarters of deficits. Will it bounce back? Wall Street is betting on the red ink to four-peat.
Finally, we have DynCorp. The military contractor has been in business for 60 years, with its roots in aviation. These days, DynCorp can just as easily train and deploy civilian peacekeepers and police trainers overseas as it can snuff out landmines in Afghanistan. When you're at the mercy of government contracts, you have to worry about budget crunches. However, the world's becoming a mercurial place lately. DynCorp's services should be in high demand.
Why the long face, short seller?
These seven companies have seen better days. The market has rewarded many of these stocks with healthy gains over the past year, but they still haven't earned the upticks.
The good news 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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