This week had all of the right ingredients to make a pessimist's stew simmer.
- There was more unrest in the Middle East.
- Spiking oil prices are nurturing inflation fears.
- Home prices fell another 4.1% in the last three months of 2010 compared to the previous year.
- Carmelo Anthony is taking his ball-hogging ways to New York.
Next week may not get any better.
There are still plenty of companies posting lower earnings than they did a year ago. Let's go over a few of the names that are expected to go the wrong way on the bottom line next week.
Latest Quarter EPS (estimated)
Year-Ago Quarter EPS
Source: Thomson Reuters.
Clearing the table
There will likely be more companies posting lower earnings next week, but these are just a few of the names that really jump out at me.
Let's start with A123. The maker of lithium-ion batteries was all the rage when it went public in 2009. Shares soared 66% that year, as consumers embraced A123's role in a future of fuel-efficient sustainable transportation. We're getting closer to said future, but the losses are widening. Oops!
Losses aren't new to Isis. The biotech with a nose for antisense is supposed to be posting deficits as it takes batting practice. However, one never likes to see deficits grow as Isis tries to push a cholesterol drug and other pipeline pleasures through the tedious regulatory process.
Unlike A123 and Isis, no one expects Range Resources to bleed red ink on the bottom line. Unfortunately for the natural gas exploration and production giant, its profitability is shrinking. Excess supply and ho-hum demand have kept natural gas prices in check.
Fellow Fool Jordan DiPietro likes Range Resources, but he's not looking back at what should be an uninspiring quarter. He's focusing on the potential for higher natural gas prices in the future. He also likes how Range Resources has sold off roughly $1 billion in assets over the past four years, deploying the proceeds into higher growth opportunities.
Trex makes weather-resistant wood-free decking material. Who builds a deck heading into the winter season? I hear you, but something's wrong when losses are expected to more than double during the seasonal lull.
Shanda Interactive is a pioneer in the booming niche of online gaming in China. Sadly, things haven't been playing into Shanda's hands lately. Tuesday's report should be the fourth consecutive quarter where Shanda posts a year-over-year decline in net income. The silver lining here is that Shanda's Chinese peers that have already reported for the same three-month period have come through with strong results.
TiVo has two problems to overcome. The DVR giant's first obstacle is the lamentable streak of losses. It's practically a lock to post its ninth consecutive quarterly deficit next week. The other problem with TiVo is that its subscriber count continues to shrink. Between folks flocking to rival DVRs and the growing popularity of the more flexible nature of on-demand streaming, TiVo has to prove that it's more than just a pretty portfolio of patents.
Finally, we have Famous Dave's. I did my part. I had two meals at the chain of BBQ restaurants during the company's latest quarter. I guess I didn't order enough. The $0.06 per-share profit that the pros are banking on is 25% below what it earned during the previous year's holiday quarter.
Why the long face, short-seller?
These seven companies have seen better days. The market has rewarded many of these stocks with reasonable gains over the past year, but they still haven't earned those upticks.
The good news here is that Wall Street already expects these companies to deliver shrinking bottom lines. In other words, the bad news is already baked into the shares.
The more I think about it, the less worried I become.
The Fool owns shares of Range Resources, which is a Motley Fool Inside Value pick. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.
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. 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.