You won’t find too many people tuning in to hear Smithfield Foods, Inc. (NYSE:SFD)’s financials later in the week. The producer of pork and other meat products agreed to a $4.7 billion buyout by Shuanghui International Holdings last week. A bad report is unlikely to sway Shuanghui. There’s a reason Smithfield Foods, Inc. (NYSE:SFD) made itself available, after all, and it’s a safe bet that both companies know what’s coming in next Friday’s report. Analysts see quarterly income coming in flat with last year’s showing.
Finally, we have KMG Chemicals, Inc.(NYSE:KMG). The producer of electronic- and wood-treating chemicals is expected to see profitability dip by a third next week.
KMG Chemicals, Inc.(NYSE:KMG) is doing something about that. Earlier this week it completed its $63.3 million purchase of OM Group’s Ultra Pure Chemicals subsidiary. When organic growth isn’t enough, acquisitions can often help. Despite the uninspiring projected bottom-line showing, shares of KMG Chemicals, Inc.(NYSE:KMG) hit a fresh high just last 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.
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 lululemon athletica.
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