4 Companies Going the Wrong Way This Earnings Season

×
iphone
Bloomberg / Getty Images
It's earnings season, and investors aren't likely to see much that impresses them.

The S&P 500 may have hit fresh all-time highs earlier this month, but the fundamentals of some of its components aren't so rosy. Net income for S&P 500 companies is expected to climb only 1.5 percent for the quarter, according to earnings estimate tracker Thomson Reuters.

Let's go over a few of the prolific companies that are widely expected to post lower quarterly earnings than they did a year earlier. Some of the names may surprise you.

Apple (AAPL)

The world's appetite for iPads and iPhones remains strong, but Apple just isn't making as much money on its iGadgetry as it used to. Consumers are going for cheaper iPad mini tablets and opting for older iPhone 4 and iPhone 4S smartphones that retail for as much as $200 less than the latest iPhone 5.

The end result has been a trend-breaking dip: For the first time in 10 years, Apple is projected to post a decline in year-over-year profitability. Wall Street's bracing for earnings per share to slip 18 percent to $10.23, even though they still foresee a modest uptick in revenue.

The onus is now on Apple to create the next "must have" gadget that it can sell at a healthy markup. That won't be easy, but now you know why Apple's stock has taken a 40 percent tumble since it hit its peak last September.


Amazon.com (AMZN)

The leading online retailer makes no bones about its emphasis on long-term customer satisfaction over short-term profitability. "We are internally driven to improve our services, adding benefits and features, before we have to," CEO Jeff Bezos wrote in last week's annual letter to shareholders. "We lower prices and increase value for customers before we have to. We invent before we have to."
A customer-centric approach is naturally appreciated by shoppers who are getting more bang for their buck at Amazon. But it's a bit surprising that shareholders haven't had a problem sending the stock higher considering Amazon's uninspiring bottom-line results.

In fact, Amazon has come up short on the bottom line relative to Wall Street expectations for three straight quarters. This sort of performance can easily take a heavy toll on a stock, but Amazon has trained the market well. Analysts see Amazon earning just a third as much as it did a year earlier, and Wall Street's cool with that for now.

Caterpillar (CAT)

To all appearances, this should be a booming time for the construction industry. Residential and commercial real estate are on the rise, and emerging markets hungry for resources would seem to be ripe for Caterpillar's construction and mining equipment.

Unfortunately, it's just not playing out that way.

Caterpillar posted declining profitability three months ago, and that's exactly what analysts are predicting for Caterpillar's next three quarters. Caterpillar's next report -- ironically enough coming up on April 22 -- Earth Day -- should shed some more light on the situation. Analysts see sharply lower earnings for the entire year on a slight dip in revenue.

Staples (SPLS)

Corporate America is supposedly showing signs of life. Why isn't the leading office supply chain getting energized as well?

Analysts see Staples posting a 10 percent decline in profitability on a 3 percent slide in sales for the quarter ending this month. The retailer of printer cartridges, task chairs, and all things office has an excuse. Business has been lousy in Europe, where austerity-encumbered economies aren't experiencing the bounce that the United States has been experiencing.

It's still an ugly snapshot for a company that has historically served as the pulse for small and mid-sized businesses.

Motley Fool contributor Rick Munarriz has no position in any stocks mentioned. The Motley Fool recommends Amazon.com and Apple. The Motley Fool owns shares of Amazon.com, Apple, and Staples. Try any of our newsletter services free for 30 days.

Increase your money and finance knowledge from home

Reading a Stock Quote

Learn to read the ingredients of a stock.

View Course »

Behavioral Finance

Why do investors make the decisions that they do?

View Course »

Add a Comment

*0 / 3000 Character Maximum

8 Comments

Filter by:
imd89

It's a good thing Obama told us all about recovery summer ALL those years ago. If not for him we would have never known it came & went!!!

April 17 2013 at 3:32 AM Report abuse +1 rate up rate down Reply
AL CONFER

Private business's have shouldered for the last five years the brunt of job cuts, Government jobs has yet to feel the burden of cuts that the private sector had to take. Government fee's, licenses, and business regulations have stifiled business's to the point of insanity. How many non essential empoyees do we as tax payers have to put up with? Fuel costs have also made a recovery almost impossible. Government is either part of the problem or part of the solution and so far they are the problem.

April 16 2013 at 10:15 PM Report abuse rate up rate down Reply
ectullis

But the private sector is doing just fine

April 16 2013 at 7:50 PM Report abuse -1 rate up rate down Reply
bnfox1957

this whole article is naïve and stupid. For example:
" To all appearances, this should be a booming time for the construction industry. Residential and commercial real estate are on the rise, and emerging markets hungry for resources would seem to be ripe for Caterpillar's construction and mining equipment." Residential real estate is not on the rise when you factor in institutional investors now buying up distresses properties and commercial real estate is not "on the rise" either with vacancies, malls, and businesses continuing to shutter across America and Europe. And emerging markets are mostly in contraction now, including a lot of mining - so they aren't buying. What kind of cheerleader shill idiot writes this uninformed drivel?

April 16 2013 at 5:01 PM Report abuse -1 rate up rate down Reply
Iselin007

Maybe when they make those Iphones the size of supositories those idiots will keep their hands on the wheel and look where they are going.

April 16 2013 at 4:18 PM Report abuse +1 rate up rate down Reply
Iselin007

Ask the part time abused underpaid retail work force how the economy is.

April 16 2013 at 4:12 PM Report abuse +2 rate up rate down Reply
Iselin007

The true economy stinks .

April 16 2013 at 4:10 PM Report abuse rate up rate down Reply
Tom

It is a sign of our TRUE economy and not the HP one

April 16 2013 at 2:49 PM Report abuse rate up rate down Reply