Why the long face, shorts?

On Friday, I went over seven companies that are expected to post lower earnings this week. I held them up as bellwethers that may rock the market, especially if shareholders weren't aware that their bottom lines are diminishing.

Today I'm back to offer the flip side. Despite the economic upheaval and the dearth of consumer spending, there are actually plenty of companies that are projected to post higher earnings this week than they did during the same quarter a year ago.

Let me lay it on the table for you:


Latest Quarter EPS (estimated)

Year-Ago Quarter EPS







Hudson City Bancorp (NASDAQ:HCBK)



Altria (NYSE:MO)



Chipotle Mexican Grill (NYSE:CMG)



McDonald's (NYSE:MCD)






Source: Yahoo! Finance. EPS = earnings per share.

Clearing the table
These aren't the only companies expected to post higher net income this week, but they are the ones that caught my eye.

Let's start with Netflix. The DVD rental specialist has already proven itself to be recession-resistant. It passed the 10 million-subscriber mark in February, as homebound worrywarts make the value call of staying in to watch rented movies.

Higher subscriber rolls don't necessarily translate into a spike in profitability. The company is spending a good chunk of change on licensing and serving up digital streams. If the earnings clock in as expected, it will mean that Netflix is able to widen its margins in this environment, and that would be even more impressive than its skyrocketing membership tally.

Last week I singled out a couple of Big Pharma companies slated to post lower year-over-year earnings, so I may as well give Amgen a chance to shine on the pedestal. The biotech vet is expecting a baby step forward this week, but it is an industry-bucking move in the right direction.

Hudson City Bancorp is a company I've been rooting for since it became one of the few large bankers to forgo the cyanide-laced TARP. It also increased its dividend earlier this year, another welcome respite from the financial services behemoths slashing their payouts.

Altria is the tobacco giant that we all remember as Philip Morris. I have my doubts about the industry over the long haul, but it seems as if the recession isn't slowing down anyone's smoking habits.

Chipotle is a stock I recommended to Motley Fool Rule Breakers subscribers two years ago. It has gone on to handily beat the market since then, but it's been feeling pretty mortal lately. Comps have remained positive, but the burrito chain has posted slightly lower earnings in its two most recent quarters. It would seem dangerous to expect bottom-line improvement during an even iffier quarter, yet that is where analysts find themselves perched.

It's a no-brainer to see McDonald's profitability inching higher as hungry penny-pinchers flock to the burger giant's value-priced deals. The cynic in me wonders if margins will be hit if folks stick to ordering off the dollar menu, and replace high-margin soft drink orders with tap water. It hasn't happened yet, though.

Finally there's JetBlue. The discount airline returned to profitability during last year's fourth quarter, after posting four consecutive quarterly losses. Analysts see the black ink sticking around, and it's certainly feasible, given a big drop in fuel prices.

Smile like you mean it
A lot of things can go wrong, of course. Chipotle's comps have stayed positive as the result of menu price increases, but discretionary income isn't all that elastic these days. It wouldn't be a shock to see margins get dinged at McDonald's and maybe even Netflix. Won't Altria take a hit if smokers move away from Marlboro and onto cheaper brands?

These seven companies have more pressure on them than the seven companies I singled out on Friday. These are the ones that are expected to post improved results. The optimism is already baked into their share prices.

Since stocks have been rallying over the past six weeks, it is also the burden of the companies with improving fundamentals -- like these seven -- to justify the market's valuation expansion.

No pressure, Wall Street. You only have to vindicate the past month and change of bullishness. Good luck with that.

Other Foolishness:

Chipotle Mexican Grill's Class A stock is a Motley Fool Rule Breakers selection, while its Class B shares are recommended by Motley Fool Hidden Gems. Netflix is a Motley Fool Stock Advisor recommendation. The Fool owns class B shares of Chipotle. Try any of our Foolish newsletters today, free for 30 days

Longtime Fool contributor Rick Munarriz wonders if his contrarian heart will ever be happy. He does not own shares in any of the companies in this story, save for Netflix. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.