It's not all peppermint kisses and cotton candy strands out there.
Many stocks may be barreling toward new highs, but the news is clearly mixed on the economic front. The dollar is at a nearly three-year low. Gross domestic product is weak, clocking in at an annualized clip of 1.8% through the first three months of the year.
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
World Wresting Ent.
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 American Tower. The provider of towers that it leases out to radio station operators and wireless companies took a hit last month after AT&T announced its plans to hook up with T-Mobile. Combining the two networks would probably lead to the elimination of coverage redundancies.
This obviously isn't a factor for the here and now. Regulators may take their sweet time before clearing that deal. However, American Tower's results are still expected to be flattish pitted against last year's results.
Corinthian Colleges was moving to the head of the class with its fellow for-profit secondary educators during the recession. Consumers were opting for the cost-effectiveness of specialized campuses to breathe new life into their stale resumes during the economic lull. The industry then got slapped with crummy student loan repayment rates and aggressive marketing practices. Enrollment has been dropping at some of the bellwethers, and Corinthian's looking to earn less than half of what it did a year earlier.
We all know about AOL's dying access business. It's been bleeding ISP customers since peaking eight years ago. The rub for AOL these days is that it's also flunking out on the advertising front. Display ads were supposed to help offset the subscription sting, but both categories have been tanking lately.
Garmin hasn't exactly lost its way, though that would certainly be fitting given its GPS specialty. It has been trying to adapt to drying demand for its dashboard gadgetry in this era of smartphone connectivity by growing its other businesses. This week it announced the acquisition of its South African distributor.
It may not be enough. Analysts believe this will be Garmin's third consecutive quarter of posting lower year-over-year profitability. The pros aren't likely being conservative. Garmin has missed Wall Street's estimates in three of the past four quarters.
Limelight Networks runs a fledgling content-delivery network, manning the server farm that helps websites deliver Web pages and chunky media content quickly and securely. This may be a growing industry, but cutthroat pricing is keeping margins in check. It also remains to be seen what will happen if wireless carries and broadband providers continue to cap data usage.
Smart Balance is best known for its heart-healthy buttery spreads. Smart Balance has tried to parlay its success there by diving into other categories but forays into peanut butter, cooking oil, popcorn, and more recently milk haven't paid off.
Finally, we have World Wrestling Entertainment. Grapplers didn't fade in popularity after it became a forgone conclusion that the antics were staged. Entertainment is still entertainment. However, it's getting harder to push pay-per-view events and prop up television ratings now that MMA and other combat sports have gained in popularity.
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.