Earnings season is about to begin, so you may as well start chewing away at your fingernails and curl up in a fetal position.

Under normal circumstances, a flurry of quarterly reports is a good thing. We buy into stocks under the assumption that they will grow in value, and hoping to see them shine every three months is a major part of that process.

But not every stock is worthy of the rally that has sent most equity prices higher since last March. Several companies are still going the wrong way on the bottom line.

Let's go over a few of the blue chips and seemingly recession-proof companies for which analysts see the arrows pointing down on the bottom line next week. Some of the names may surprise you.


Latest Quarter's EPS (Estimated)

Year-Ago Quarter's EPS




Southwest (NYSE:LUV)



Bank of America (NYSE:BAC)






UnitedHealth Group (NYSE:UNH)



General Electric (NYSE:GE)



Harley-Davidson (NYSE:HOG)



Source: Yahoo! Finance.

Clearing the table
Several companies will post lower earnings next week, but these are just a few of the names that really jump out at me.

Let's start with American Airlines parent AMR and Southwest. The two carriers are on opposite ends of the airline spectrum. AMR is a legacy carrier with all of the baggage that comes with it. Southwest has been around for decades, but its nimble operating model makes it stand out as a typically profitable carrier.

The one thing AMR and Southwest have in common is that they're expected to come up short compared to what they earned a year earlier. An economic recovery may improve occupancy levels and make passengers more willing to pay higher fares, but another pesky spike in fuel prices over the past year is crushing margins.

Bank of America should presumably be in a better place than where it was a year ago -- when bailout money was being handed out like government cheese. If we go by share gains, Bank of America would seem to be doing a lot better, given its sixfold advance since last February's lows. However, the pros see Bank of America losing more money in its final quarter of 2009 than it did in 2008. Thankfully, those same analysts see a buoyant return to profitability in 2010.

What's the deal with eBay? This company should be eating recessions for breakfast. Its auction site offers bargains to bidders, and it's the ideal platform for launching cottage industries, given the country's 10% unemployment rate. Well, things haven't panned out that way. Despite the booming success of PayPal, the company's namesake marketplace business has been dragging its feet in recent quarters.

UnitedHealth Group is the gigantic health-care insurer. These are uncertain times for the industry, given the government's mandate to shake up the medical arena, but the fact that a consensus hasn't been reached after several months of back-and-forth makes it more likely that UnitedHealth won't be affected much. But earnings are going the wrong way, even in these pre-reform days.

General Electric's financial-services exposure was a blessing a few years ago, but tailwinds can sometimes swirl into headwinds. The irony is that GE has slashed its dividend to roughly a third of what it used to be, yet the stock has gone on to triple since bottoming out last March. Year-over-year profits have fallen in each of the past five quarters. Wall Street sees that streak stretching to six by the end of next week.

Finally, we have Harley-Davidson. Few groups are as fanatically loyal as Harley owners, but the company hasn't been in hog heaven during the recession. Earnings have clocked in lower for six consecutive quarters, and now Harley is projected to post its first quarterly loss in ages.

Why the long face, short seller?
These reports aren't likely to be pretty. Many of these stocks are in seemingly healthy sectors, to boot. An online swap shop giving bargain hunters more than they bargained for? The "bags fly free" airline darling coming up short on the runway? This isn't going to be an attractive quarter, no matter how much you polish your Harley's chrome.

There is a silver lining, though. Investors are already braced for the worst with these reports. If there is an upside to this grim list, it's that lower profitability is already baked into next week's reports, so the door is open for unexpected surprises.

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

The Motley Fool owns shares of UnitedHealth Group, which is a Motley Fool Inside Value recommendation. eBay and UnitedHealth Group are Motley Fool Stock Advisor selections. Motley Fool Options has recommended a bull call spread strategy on eBay. 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 a part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.