It's not all roses and puppy dog smiles out there.
Many stocks may be barreling toward new highs, but the news is clearly mixed on the economic front. There were a whopping 412,000 people claiming unemployment benefits last week. Another spike in the Producer Price Index isn't making life any cheaper.
It gets worse.
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
Johnson & Johnson
Hudson City Bancorp
Advanced Micro Devices
Source: Thomson Reuters.
Clearing the table
There will likely be more companies posting lower earnings next week; these are just a few of the names that really jump out at me.
Let's start with Citigroup. The banking giant may have cleared regulatory stress tests to reinitiate its quarterly dividend last month, but that doesn't mean Citi's making more money these days.
Cree shareholders aren't feeling as bright as the LED lighting company's wares. Cree shares hit a new 52-week low yesterday. Aggressive pricing in a competitive niche is pinching margins. However, analysts still see Cree posting higher results for all of fiscal 2011 -- which ends in June -- despite projected dips on the top and bottom lines during the final two fiscal quarters.
Johnson & Johnson investors may wish the drug and consumer products giant's quarterly reports came with the same "no more tears" promise as its baby shampoo. Johnson & Johnson had clocked in with year-over-year profit growth during the past six quarters, but that streak appears to be coming to an end with Tuesday's report.
AT&T and Verizon should be rolling these days. They're the only two companies carrying the iPhone domestically. Unlike traditional cable providers, AT&T and Verizon have grown their value-priced television services businesses. Both companies are also moving away from unlimited wireless data plans, making sure that their more active smartphone subscribers pay according to usage. Despite the favorable tailwinds, both AT&T and Verizon are projected to post slight declines in net income per share next week.
Hudson City earned plenty of style points when it was one of the larger banks to refuse government bailout money during the financial collapse. Is it about to squander all of that good karma as it dives into red ink? Not exactly. Hudson City has a good excuse. It will go through bottom-line pain in the near term as it restructures its balance sheet, paying off a healthy chunk of debt by taking out a smaller loan and selling billions in mortgage-backed securities. In short, it's a step back on the bottom line, but a forgivable one.
Finally, we have AMD slipping. Global PC shipments fell during the quarter, according to industry sales tracker IDC, something that is obviously not good news for the country's second-largest maker of microprocessors. However, at least AMD is profitable now.
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.