Things are getting a little crazy out there.
Did you hear about the barely profitable social network that temporarily graduated to an 11-figure market cap yesterday?
Those aren't the only gains that are marginally justified. Several stocks have scored reasonable gains despite their profitable shortcomings.
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
American Eagle Outfitters
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 Take-Two Interactive. The video game company is generating rave reviews for its upcoming L.A. Noire that tips its hat to the film noir cinematic genre. Take-Two used to be a one-trick pony, struggling during the lulls between Grand Theft Auto releases. It has gone on to flesh out its catalog with the success of BioShock and Red Dead Redemption.
The current quarter will look great if L.A. Noire is the hit that critics believe it will be, but the same can't be said for the quarter it left behind. The pros see red -- as in red ink -- reversing a year ago profit.
Campbell Soup's earnings growth isn't as "M'm M'm Good" as its namesake soups.
"Wasn't soup supposed to be recession-proof?" I asked when the food giant hosed down its guidance six months ago. "Campbell sells affordable comfort food, so either consumer tastes are changing or the competitive environment has gotten so cutthroat that even the mighty Campbell is seeing stars -- and not the variety that come packaged with broth and tiny chunks of chicken."
Things don't appear to be getting any better.
Marvell Technology is an integrated circuits giant. This is a cyclical specialty, but it's still not encouraging to see projected quarterly earnings take a 21% year-over-year dip next week.
Hanwha SolarOne is a Chinese maker of solar energy cells. There are plenty of bargains in this space with single-digit P/E ratios. Hanwha is one of them, but what does it tell you when its trailing multiple is lower than its forward multiple? Yes, earnings are going the wrong way.
American Eagle Outfitters is an apparel retailing staple in many suburban shopping malls. There are several clothing stores that are bouncing back lately, but American Eagle is not one of them.
The first three Chinese online gaming companies to post their first quarter results clocked in with better-than-expected growth in recent days. Perfect World is the fourth publicly traded gamer to step up, but it's looking at a sharp drop in net income.
Finally, we have TiVo. Despite being the only brand that matters when it comes to DVR technology, TiVo keeps shedding subscribers. Profits turned to losses a couple of years ago, and now those losses are widening.
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.