Last week was pretty wild.

Between the sharp sell-off during the first three trading days and the redemptive rally that followed, market volatility is reminding us that it's never too far away.

I singled out seven companies over the weekend that are projected to post lower earnings this week than they did a year earlier. Thankfully, that's just one side of the story.

There's more good news than bad news on the earnings front. Between recessionary cost-cutting and general improvement from last year's depressed levels, several companies are in better shape now than they were a year ago.

Let's go over seven companies that analysts see posting healthier bottom lines this week.


Latest Quarter EPS (estimated)

Year-Ago Quarter EPS



Adobe Systems (Nasdaq: ADBE)




Sonic (Nasdaq: SONC)




Walgreen (NYSE: WAG)




Paychex (Nasdaq: PAYX)




Red Hat (NYSE: RHT)




GameStop (NYSE: GME)




Oracle (Nasdaq: ORCL)




Source: Thomson Reuters.

Clearing the table
Let's start at the top with Adobe.

The leading maker of desktop publishing software is the company behind the ubiquitous Photoshop touched-up snapshots, Acrobat PDF files, and Flash videos. The same Internet that propelled Adobe to prominence also levels the playing field for potentially cheaper competitors, but Adobe has done a good job over the years of staying on top.

Sonic runs the popular chain of drive-in restaurants where chili dogs and slushies are served to the car-trapped hungry. Everything isn't all shiny golden arches in this space. Carl's Jr. parent CKE Restaurants and Burger King were taken private last year, and many of the burger flippers outside of Mickey Ds aren't doing so hot. Sonic can obviously be more profitable, but earning $0.03 a share is still a celebration worthy of a cherry limeade during Sonic's weekday Happy Hour.

Walgreen runs the popular drugstore chain that bears its name. This is typically seen as an all-season niche, and Walgreen is certainly worthy of the tag. It was one of the mere handful of stocks to hit fresh 52-week highs during last week's downdraft.

Paychex is a leading provider of payroll services. Small- and even medium-sized businesses find that it's often a good idea to outsource payroll, human resource, and employee benefits management.

Red Hat has built a profitable model on open source. Linux may be freely available to anyone, but Red Hat cranks out reliable enterprise software that it can offer at a lower price point than its more mainstream competitors.

GameStop continues to defy gravity with its quarterly reports. I'll admit it. I've been down on the video game retailer for a couple of years now. Digital delivery will rub out the bricks-and-mortar middlemen. GameStop's higher margin resale business is being copied elsewhere. However, GameStop is still finding a way to grow its bottom line given its nimble ways, loyal gaming audience, and attractive store economics.

This doesn't mean that my original bearish call was wrong. In fact, GameStop is one of the few consumer-facing stocks that have been pounded since the bull rally began in March 2009. I guess there are too many worrywarts like me who are more concerned with the model's future than the near-term fundamental upticks. Growing earnings and a cascading share price have resulted in a cheap earnings-based valuation, but only for those who don't see GameStop's model as obsolete in a couple of years.  

Finally, we have Oracle. Larry Ellison's has built a beast in enterprise software, making several timely acquisitions along the way. Despite the juggling act, Ellison doesn't disappoint. He has consistently met -- and more often than not, topped -- analyst quarterly income estimates for several years.

Cross those fingers, but know the fundamentals
These aren't the only companies expected to post year-over-year gains this week. Several companies have either found ways to grow during the recession or have simply cut enough corners to show improvement on the bottom line.

This doesn't mean that investors can rest easy. The bad news here is that these companies are expected to post improving results. The optimism is already baked into their share prices. It makes it easier for them to slip, but why begin worrying about the companies that we aren't supposed to be worrying about?

If analysts are doing a good job modeling their profit targets, we'll be just fine.

Which of the many earnings report due out this week are you looking forward to? Share your enthusiasm in the comment box below.

Paychex is a Motley Fool Inside Value choice. Adobe Systems is a Motley Fool Stock Advisor recommendation. McDonald's is a Motley Fool Income Investor selection. Motley Fool Options has recommended writing covered calls on GameStop and a diagonal call position on Adobe Systems. The Fool owns shares of GameStop, Oracle, and Paychex. 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 prefers to look at the bright side of life -- and strife. 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.