The economy is showing signs of fumbling the recovery.
Sure, Tuesday's report on durable goods in this country is showing that orders spiked 5.7%; but it's not as rosy as it seems. Larger orders for commercial aircraft padded the results. Back out transportation, and the metric actually fell 0.5% for the month.
The news isn't just iffy on the macro level. There are also more than a few companies that aren't pulling their own weight in this supposed economic recovery.
There are still plenty of names posting lower earnings than they did a year ago. Let's go over a few of the companies that are expected to go the wrong way on the bottom line next week.
Company | Latest Quarter EPS (Estimated) | Year-Ago Quarter EPS |
|---|---|---|
Bona Films (NASDAQ: BONA ) | $0.08 | $0.09 |
Team (NYSE: TISI ) | $0.03 | $0.17 |
International Speedway (NASDAQ: ISCA ) | $0.36 | $0.37 |
WD-40 (NASDAQ: WDFC ) | $0.56 | $0.65 |
Xyratex (NASDAQ: XRTX ) | ($0.18) | $0.40 |
Source: Thomson Reuters.
Clearing the table
Let's start at the top with Bona Films.
The Beijing-based film distributor has been one of China's most-neglected stocks. The regional movie distributor went public at $8.50 three years ago, but it has never traded out of the single digits.
Some will argue that Bona has made its own bed. It has been profitable every single quarter in its brief public tenure, but the company has also missed Wall Street's profit targets in each of the four previous periods. It's hard to fathom that unwelcome streak coming to an end when Bona reports on Monday. Despite China's growing appetite for theatrical entertainment, Bona's been a disappointment.
Team was a losing team after hosing down its guidance earlier this month. The provider of specialty industrial services warned that weakness at its Canadian and European business units, and the timing of large turnaround projects, find it scaling back on its expectations for its fiscal year ending in May.
Team now sees a fiscal year profit of $1.70 a share to $1.85 a share, with $705 million to $720 million in revenue. The third quarter -- the one that Team will be reporting on come Tuesday -- is seasonally a weak period, but the international weakness will sting this time around. Team is now targeting break-even results, well short of the $0.10 a share that it rang up a year earlier.
Some analysts have yet to update their projections, explaining why Team's average estimate is at $0.03 a share instead of closer to the likely goose egg on the bottom line.
International Speedway is the motorsports promoter behind some of the more iconic race tracks, including Daytona and Talladega.
The promoter made news for the wrong reason last month. A horrific multi-car crash during the final lap of the Nationwide Series race the day before the legendary Daytona 500 injured several spectators, after debris from the race car of Kyle Larson flew into the stands.
The company may address fan safety concerns, or any negative attendance trends since the tragic event took place, but the reason International Speedway makes the cut in this column is that analysts see it posting slightly lower earnings than it did a year earlier on flat revenue.
WD-40 naturally makes the namesake lubricant that's versatile for its countless applications. The company's product portfolio of cleansers and cleaners includes Lava industrial-strength soap, X-14 bathroom cleaners, and Carpet Fresh odor neutralizer.
Wall Street sees WD-40's profitability slipping 14% on a per-share basis and, unfortunately, the company has fallen short of bottom-line forecasts in two of the past three quarters.
Finally we have Xyratex. The provider of enterprise data storage solutions had posted just a single quarterly deficit in the three previous years before posting a loss in its most recent quarter. The market's braced for another quarter of red ink.
Xyratex rewarded investors late last year with a meaty $2 per share one-time dividend, but shareholders suffering through the losses now may be wondering if their patience will be rewarded this time around. The stock is actually trading higher so far through 2013, but eventually, the fundamentals will have to follow suit.
Why the long face, short-seller?
These 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. Lower earnings translates into higher earnings multiples, and nobody wants to see that happen.
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.
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