The market's had a good run since early March, so maybe you haven't noticed that a lot of companies have been posting lower year-over-year earnings lately. Sure, we knew that this year's freshman quarter would be tough to ace. Those slumping numbers just provide a greater contrast to the recent rash of buoyant share prices.
Things won't get any better next week, when several blue chips and seemingly recession-proof companies are expected to post their own year-over-year declines. Let's go over a few of the companies that analysts predict will join that list. Some of the names may surprise you.
|
Company |
EPS Estimate |
Year-Ago |
|---|---|---|
|
BMC Software |
$0.62 |
$0.63 |
|
DISH Network |
$0.56 |
$0.57 |
|
Dr. Pepper Snapple |
$0.29 |
$0.40 |
|
Whole Foods Market |
$0.18 |
$0.29 |
|
Blockbuster |
$0.15 |
$0.20 |
|
51job |
$0.03 |
$0.11 |
|
Prestige Brands |
$0.17 |
$0.21 |
Source: Yahoo! Finance.
Clearing the table
There will likely be hundreds of companies posting lower earnings next week, but these are just a few of the names that really jump out at me.
BMC is an enterprise software giant. Sure, things aren't going so well in the corporate space, but the company has been a consistent grower. If BMC comes up short, as Wall Street predicts, it will be the company's first year-over-year slide in four years.
DISH Network is the country's second-largest provider of satellite television. If recessions make folks more homebound, shouldn't a company like DISH be thriving? Apparently not. It shed subscribers last year, and it may not be getting any better in 2009.
There's no need to explain the two signature beverages of Dr. Pepper Snapple Group. Soft drinks and juices are seemingly all-weather indulgences. They don't cost much. Snapple is "made from the best stuff on Earth," so it can't be that bad for you. Unfortunately, analysts think the company's bottom line will be that bad, predicting a 28% dip in earnings.
Whole Foods Market shares have been raking in the dough in recent months. The stock has tripled since bottoming out in November. This doesn't mean that the former market darling is a growth stock again. The organic grocer is still expected to post a decline in profitability for the seventh quarter in a row.
A year ago, analysts figured that Blockbuster would earn $0.15 a share in the first quarter. It earned $0.20. That was the last time that the video rental chain posted a profit. Now Mr. Market is back for more, once again expecting a $0.15-a-share profit. Will Blockbuster fare better this time around?
51job runs a popular job-listings publication and website in China. With the country's government taking proactive moves to stimulate the economy, one would expect a Chinese job listings specialist to be living high on the proverbial hog.
You may not be familiar with Prestige Brands, but you probably recognize its handiwork. Some of its signature products include Compound W wart treatment, Chloraseptic throat spray, Murine eye drops, and household cleaner Spic and Span. Aren't these supposed to be recession-proof drugstore staples? Someone with a sore throat may skip a night at the movies, but they probably won't turn away from a blast of Chloraspetic.
Shield your eyes, but do take snapshots
I hate to be a downer, but I have to be a realist. Plenty of companies that are supposed to hold up well in this environment -- or in the case of Whole Foods, a runaway stock price that assumes fiscal improvement -- are faltering financially.
Then again, the market has already baked in a disappointing quarter for these and other companies. The past two months of rallying stocks has been fun, but stocks are still mostly trading lower today than they were a year ago.
Analysts have also underestimated the profit-generating potential of several companies earlier this earnings season. January, February, and March were definitely difficult months for companies, but many of them saw the slow times coming and began to scale back their expenses accordingly.
Am I happy to see so many top stocks poised to take a step back next week? Of course not. Might any potential weakness prove to be overdone, providing investors with perhaps the last great entry points into many of these stocks? I would bet on it.
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