Adobe Systems Incorporated (ADBE), Finisar Corporation (FNSR): 5 Reasons to Worry About This Week

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For now, investors will have to sit through another quarter of ho-hum top-line growth and contracting margins. It also doesn’t help that Jabil has come up short on the bottom line in two of the past three quarters.

Tibco Software Inc. (NASDAQ:TIBX) is a provider of infrastructure software for companies. Just like optical networking, enterprise software companies should be thriving in an improving climate. That’s not happening at TIBCO, where the pros see profitability sliding more than 30% on flat revenue growth.

TIBCO’s integration process management and business optimization software solutions should be in high demand these days. Its solutions help businesses make better decisions more quickly. It’s just not happening.

“We remain very focused on continuing the changes we initiated last year to improve our execution,” CEO Vivek Ranadive claimed in the earnings release of TIBCO’s previous quarter, but the enterprise software company still fell short on the top line and provided weaker-than-expected guidance for the quarter that it will report on next week.

TIBCO pointed to weakness in Northern Europe last time around, but scapegoats aren’t excuses when overall profitability is going the wrong way.

Finally, we have Darden Restaurants, Inc. (NYSE:DRI). The company behind Olive Garden, Red Lobster, and a half-dozen other concepts that you have probably tried once or twice is in a funk. Casual dining itself has been soft as the hungry flock to fast-casual chains that are cheaper and faster but still provide quality eats.

It’s a problem. In its previous quarter, same-store sales ran negative at both Olive Garden and Red Lobster in every month. Its third-largest concept — casual steakhouse LongHorn — posted negative comps in two of the three months.

Darden’s trying. Two weeks ago it introduced a shrimp and lobster pot pie at Red Lobster topped with the chain’s signature Cheddar Bay biscuit in the form of a crust. However, until diners return to casual dining — and that doesn’t appear to be happening for anything outside of the upscale concepts — Darden will have to contend with diners who prefer fast-casual’s quick quality eats without the need to tip the cashier.

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.

The article 5 Reasons to Worry About Next Week originally appeared on Fool.com.

Longtime Fool contributor Rick Munarriz has no position in any stocks mentioned. The Motley Fool recommends Adobe Systems and Tibco Software. The Motley Fool owns shares of Darden Restaurants.

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