This is a short trading week, but that doesn't mean it belongs to the shorts.
On Friday, I went over seven companies that are expected to post lower earnings this week, but not every report this week is going to look like a sinkhole. Despite the turbulent economy, there are several companies looking to post higher earnings this week -- or, at the very least, narrowing losses.
Once again, I have a table, and I'm not afraid to set it.
|
Company
|
Latest Quarter's EPS (Estimated)
|
Year-Ago Quarter EPS
|
|
Borders Group (NYSE: BGP )
|
($0.50)
|
($0.53)
|
|
AutoZone (NYSE: AZO )
|
$2.89
|
$2.49
|
|
Dollar Tree (Nasdaq: DLTR )
|
$0.60
|
$0.48
|
|
Flowers Foods (NYSE: FLO )
|
$0.41
|
$0.39
|
|
Monro Muffler Brake (Nasdaq: MNRO )
|
$0.15
|
$0.13
|
|
Sanderson Farms (Nasdaq: SAFM )
|
$0.55
|
$0.30
|
|
Esterline Technologies (NYSE: ESL )
|
$0.99
|
$0.84
|
Source: Yahoo! Finance.
Clearing the table
Let's start at the top. Borders is the bookstore superstore that's starving for a happy ending. It's been three years since the chain has posted a profit outside its seasonally potent holiday quarter. Even the patient value seekers at Motley Fool Inside Value threw in the towel on Borders several months ago.
Posting a loss of $0.50 a share tonight -- as analysts predict -- is a narrower deficit, but that's still a lot of red ink for a company that sells books written mostly in black ink. However, if this outlook isn't exactly a step in the right direction, at least it's not a step deeper into the wrong direction.
AutoZone and Monro have similar bullish bents. If drivers aren't buying new cars, they'll be taking better care of their existing ones. That's good news for AutoZone's auto-parts empire and Monro's chain of muffler, brake, and tire repair shops.
Dollar Tree is a retail winner at a time when folks are counting their pennies. The dollar stores can't replace supermarkets and discount department stores, but Dollar Tree stores offer a wide enough variety of buck-priced items to give consumers the purchasing power they demand in a soft economy.
Flowers Foods and Sanderson Farms are both food makers. Sanderson is a poultry processor, and Flowers specializes in baked goods such as bread and muffins. Chicken sandwich, anyone? Sure, food is perceived to be an all-weather industry, but we've seen several food companies post lower earnings this past quarter, as consumers gravitate toward cheaper store brands. You always have to applaud the winners, even in the consistent sectors.
Esterline is a conglomerate with interests in aerospace, defense, and health care. Three months ago, the company had a healthy backlog of orders, was swallowing a pair of recent acquisitions, and was sticking to its guidance that calls for earnings of between $3.70 and $3.90 a share for all of this year. If it lands anywhere near its targets, the stock is trading at an attractive single-digit earnings multiple.
Cross those fingers, but know the fundamentals
These seven companies have more pressure on them than the seven profit sinkers I singled out on Friday. These are the ones that are expected to post improving results. The optimism is already baked into their share prices.
One or more of them can slip, of course. A battered Borders can post a wider deficit. Value-minded retailers can still get roughed up on the way to the bottom line if they are forced to trim margins to move merchandise. Even the defensive food companies may have some cost-containment demons to tackle.
Some other reads to get you through the week:
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