5 Reasons to Worry About Next Week

The economy is showing signs of fumbling the recovery.

Even though a Federal Reserve official is suggesting that the central bank may be feeling comfortable enough to ease the bond-buying stimulus that the Fed has been providing as early as this summer, we're not exactly out of the woods just yet.

The financial data issued this week hasn't been very encouraging. CPI data came in weak, and after a hearty March, housing starts fell a sharp 16.5% in April.

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

JA Solar (NASDAQ: JASO  )

($1.20)

($1.00)

Best Buy (NYSE: BBY  )

$0.25

$0.72

Hewlett-Packard (NYSE: HPQ  )

$0.81

$0.98

Marvell Technology (NASDAQ: MRVL  )

$0.14

$0.23

Qihoo 360 (NYSE: QIHU  )

$0.14

$0.21

Source: Thomson Reuters.

Clearing the table
Let's start at the top with JA Solar. There have been a few pleasant surprises out of the solar energy realm this earnings season, but JA Solar isn't likely to be one of them. Wall Street sees double-digit declines on both ends of the income statement for the Chinese provider of solar cells and modules.

Don't be surprised if JA Solar's deficit is steeper than the $1.20 a share currently targeted. History hasn't been kind to the prognosticators here, with JA Solar falling woefully short of expectations every quarter over the past year.

Best Buy may be one of this year's hottest stocks -- more than doubling so far in 2013 -- but don't mistake the chart for a turnaround. The registers are still ringing slowly at the consumer electronics chain, and analysts see Best Buy earning roughly a third of what it did during last year's fiscal first quarter.

Hewlett-Packard investors should be braced for a step back. The PC giant's biggest rival posted a brutal 79% drop in reported profitability for its latest quarter last night. HP is in better shape. It has diversified into business services to offset the slide in desktop and laptop sales, but why didn't HP make a bigger dent in smartphones and tablets when it could've made a difference?

HP is the world's largest PC maker. It should've been able to see the trend toward mobile gadgetry coming soon enough to make the right decisions.

Marvell Technology is a maker of mobile communications equipment, but it's failing the make the growth connection these days. Analysts see revenue and earnings per share sliding 9% and 39%, respectively, when it reports on Thursday. Marvell may seem to be in the right place in serving the digital connected lifestyle, but where's the growth? Earnings per share have declined in eight consecutive quarters. The pros see that streak stretching to nine.

Finally, we have Qihoo 360. Isn't this the Chinese dot-com darling that's turning heads in the search engine market in the world's most populous nation? Isn't Qihoo 360 the top player in Web browsers and security software at a time when usage is exploding? The answer is yes on both fronts, but Qihoo 360 is growing. Wall Street's forecasting a 53% surge in revenue when the company reports on Monday morning. The bottom-line snag is that Qihoo 360 is investing in its products and the monetization of its fast-growing search platform. The profitability payoff won't happen right away, but it may surprise some investors when they see earnings likely heading the wrong way next week.

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.

Should you worry about Best Buy?
The brick-and-mortar versus e-commerce battle wages on, with Best Buy caught in the middle. After what might have been its most tumultuous year in history, there are now even more unanswered questions about the future for the big-box electronics retailer. How will new leadership perform? Will a smaller store format work out for both the company and its brave investors? Should you be one such brave investor? To help answer all these questions, The Motley Fool has released a premium research report detailing the opportunities -- and the risks -- in store for Best Buy. Simply click here now to claim your comprehensive report today.

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