It’s not a perfect world out there for investors, but things may be starting to get better.
Last week’s run to a new Dow Jones Industrial Average high and the encouraging drop of the unemployment rate to its lowest level in more than four years are welcome signs.
I recently went over some of the companies that are expected to post lower quarterly profits when they report this week. Thankfully, they’re the exceptions and not the rule.
| Company | Latest Quarter EPS (Estimated) | Year-Ago Quarter EPS |
|---|---|---|
| Diamond Foods, Inc. (NASDAQ:DMND) | $0.06 | $0.01 |
| Peregrine Pharmaceuticals (NASDAQ:PPHM) | ($0.07) | ($0.13) |
| TICC Capital Corp. (NASDAQ:TICC) | $0.27 | $0.26 |
| Delcath Systems, Inc. (NASDAQ:DCTH) | ($0.16) | ($0.32) |
| Ebix Inc (NASDAQ:EBIX) | $0.45 | $0.44 |
Source: Thomson Reuters.
Clearing the table
Let’s start at the top with Diamond Foods, Inc. (NASDAQ:DMND).
The snack giant is trying to get beyond an embarrassing couple of years. An accounting scandal and a botched attempt to acquire the Pringles line of potato chips smacked Diamond Foods, Inc. (NASDAQ:DMND)’s credibility, but the company that got its start 100 years ago when a collective of California walnut growers banded together is crawling its way back to credibility.
Diamond Foods, Inc. (NASDAQ:DMND) — whose brands include Emerald nuts, Pop Secret microwaveable popcorn, and Kettle potato chips — is still a work in progress. Analysts see revenue and earnings declining this fiscal year that ends in July. However, analysts still see bottom-line improvement this quarter, overcoming an expected 9% decline in revenue.
Peregrine is a fledgling and for now profitless biotech researching monoclonal antibodies for the treatment and diagnosis of cancer.
Investors aren’t buying into Peregrine for today’s financial results, and that’s a good thing. Peregrine is years away from profitability and meaningful revenue. The market will have to wait until its potentially promising treatments gain regulatory clearance to truly pay off. However, for now the important takeaway is that Peregrine’s deficits are getting narrower.
You have to start somewhere.
TICC Capital Corp. (NASDAQ:TICC) Capital is one of the many high-yielding business development companies out there, investing in bank loans, debt, and equity tranches of small- and mid-sized companies. TICC Capital Corp. (NASDAQ:TICC) then passes on the bulk of its proceeds to its investors in the form of dividends.
TICC Capital Corp. (NASDAQ:TICC) Capital completed a secondary offering last month. Secondary offerings may be dilutive to investors, but TICC Capital Corp. (NASDAQ:TICC) will put the new money to work earning more high yields off of cash flow positive companies.
Delcath Systems is trying to cash in on its drug/device combination product — the Delcath Hepatic Delivery System — for applications in oncology. Delcatch is initially focusing on treating primary and metastatic liver cancers.
Delcath is still early in its revenue-generating cycle. Analysts see it generating just $6.6 million in revenue this year, but that’s a major step up from 2012 where it likely raked in less than $0.5 million. We’ll know for sure on Wednesday when it reports. The key takeaway here is that Delcath is expected to lose half as much on a per-share basis as it did in Wednesday’s report than it did during the same quarter a year earlier.
Finally, we have Ebix Inc (NASDAQ:EBIX).
The provider of enterprise software solutions for the insurance industry recently came under fire for its accounting practices. Ebix has been here before, and the stock bounced back after refuting the latest claims that Ebix Inc (NASDAQ:EBIX) is engaged in aggressive and questionable accounting practices.
Ebix Inc (NASDAQ:EBIX) will get another chance to defend itself on Thursday when it reports what Wall Street expects to be marginally improved bottom-line results.
Wall Street sees Ebix Inc (NASDAQ:EBIX) earning $0.45 a share in Thursday’s report, narrowly besting the $0.44 a share it rang up a year earlier. The good news for investors is that Ebix Inc (NASDAQ:EBIX) has an impressive streak of beating profit projections in each of the 12 previous quarters.
Cross those fingers, but know the fundamentals
Investors in these five stocks have a right to be excited. They are all improving their financial situations. They are worthy of the gains that the market rally has bestowed upon them over the past year.
I wouldn’t be uncomfortable owning any of these companies. They’re doing the right thing, regardless of Mr. Market’s mood swings.
The expectations may be high, but these five stocks wouldn’t have it any other way.
Keep thinking ahead
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The article 5 Reasons Not to Worry This Week originally appeared on Fool.com and is written by Rick Munarriz, Munarriz.
Longtime Fool contributor Rick Munarriz owns shares of Ebix and Technology Investment Capital.. The Motley Fool recommends Ebix. The Motley Fool owns shares of Ebix. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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