Bargain stocks may be everywhere, but what happens to valuations when stocks rise as earnings fall?

Isn't that what's happening right now? The market has been rallying since March, but the stock gains are making promises that the fundamentals of many companies can't keep. In fact, most of the major companies reporting earnings during the upcoming holiday-shortened week are expected to post lower earnings than they did a year ago.

Let's go over a few of the companies whose quarterly date with Mr. Market may be one that investors come to dread.

Company

Latest Quarter's EPS (Estimated)

Year-Ago Quarter's EPS

H&R Block (NYSE:HRB)

$2.05

$2.11

Sealy (NYSE:ZZ)

$0.05

$0.08

Synnex (NYSE:SNX)

$0.48

$0.56

Constellation Brands (NYSE:STZ)

$0.32

$0.34

Acuity Brands (NYSE:AYI)

$0.57

$1.01

MSCI (NYSE:MXB)

$0.24

$0.27

MSC Industrial (NYSE:MSM)

$0.38

$0.81

Source: Yahoo! Finance.

Clearing the table
There will probably be many more companies posting lower earnings next week, but these are just a few of the names that really jump out at me.

H&R Block is the tax accounting giant. Don't let the big round numbers fool you. These results come from the company's busiest quarter, as its tax-preparation offices look busy barreling toward April 15. Investors aren't buying it. Despite its beefy 4% dividend yield, the stock hit a fresh 52-week low last month. Hopefully, the company will see its debt levels fall in its typical seasonal pattern, even if earnings fall short.

If there is any truth to the saying that money is the safest when it's under a mattress, Sealy should be making a killing in this nervous market. Unfortunately, it's just an expression. Sealy's quarterly profits are expected to be slashed next week. There was a time when the bedding industry seemed recession-resistant. No matter how tough things get, we won't put up with old and lumpy mattresses. Well, either times have gotten really bad, or the industry is making beds that just flat out last longer.

Synnex is an IT supply-chain company. This may seem like an industry that can't thrive under an iffy economy, but Synnex had no problem growing its bottom line until now. In fact, you have to go all the way back to 2005 to find the last time that Synnex delivered lower earnings than it did the year before. That streak will apparently end on Tuesday.

Whether you're in the mood to sip a glass of Mondavi wine or cool down with an imported bottle of Corona beer, Constellation Brands thanks you. Liquor usually holds up well in a soft economy, and not just because some adults are so bummed that they're driven to drink. Alas, its inclusion in this list means that Constellation Brands is not growing right now.

Lighting fixtures is Acuity's game. Will a soft report be an illuminating event? Granted, this shouldn't be a booming industry during lean times. Acuity's doing its best to make up the difference. It acquired Sensor Switch -- a leader in lighting controls and energy-management systems -- two months ago.

MSCI is a provider of investing data, at a time when the global markets have put in a nice rally. The stock is trading well above its IPO price of $18 in November 2007, but what's wrong with this picture? Shouldn't earnings be inching higher as the equity indexing and software specialist makes the most of renewed investor interest in stocks? 

Finally, MSC Industrial is a favorite around Fooldom. The distributor of industrial products carries the highest five-star rating in Motley Fool CAPS. Tom Gardner also recommended the stock to Motley Fool Stock Advisor subscribers last year, and it has gone on to beat the market easily since his re-recommendation in November. If analysts have this one pegged correctly, though, its quarterly earnings will fall by more than half next week.

Why the long face, short seller?
After working your way through these seven reports next week, you may be looking forward to taking Independence Day off. These quarterly reports aren't going to inspire too many fireworks on their own. The upside for investors is that Wall Street isn't holding out hope for any miracles here. It fully expects these seven companies to post profit declines. The real surprise here would be healthy reports.

And they still may come. It wouldn't take much of a positive surprise for MSCI or H&R Block to post year-over-year improvement next week. Constellation Brands is close, and it has beaten Wall Street's profit targets in four of the past five quarters.

The more I think about it, the less worried I become.

Some other reads to get you through the weekend:

MSC Industrial Direct is a Motley Fool Stock Advisor recommendation. Try any of our Foolish newsletter services free for 30 days

Longtime Fool contributor Rick Munarriz wonders whether his contrarian heart will ever be happy. He owns no shares in any of the companies in this story and 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.