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5 Stocks Set to Dive After Earnings

The earnings bar is set way too high for these companies

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Century Aluminum

Third-quarter earnings kicked off with Alcoa (NYSE:AA) reporting results that widely missed expectations. Alcoa blamed the miss on tumbling aluminum prices. Smaller aluminum producer Century Aluminum (NASDAQ:CENX) reports results after the market closes Tuesday. Estimates for the period have been tumbling over the past 90 days. Have the cuts in profit forecasts gone far enough? Estimates for Alcoa were slashed, too, but the company still missed the mark by seven cents per share. With CENX trading for 13 times current-year estimates — which still are too high — shares could fall with a poor report.

Panera Bread

Fast-growing restaurant companies like Chipotle Mexican Grill (NYSE:CMG) and Buffalo Wild Wings (NASDAQ:BWLD) already have reported strong results for the past quarter. We get operating results from Panera Bread (NASDAQ:PNRA) after the market closes Tuesday. Panera has exceeded estimates in each of the past three quarters, but by the thinnest of margins. This quarter, estimates have inched higher, and the bar now might be too high. With PNRA shares trading for 25 times current-year estimated earnings, a misstep could send shares tumbling.

General Dynamics

If you’re looking for an industry likely to be subject for reduced profit guidance, look no further than the defense sector. General Dynamics (NYSE:GD), a large government defense contractor and maker of private jet cabins, reports earnings before the bell Wednesday. Wall Street estimates for General Dynamics have been little changed thanks to the company beating expectations in each of the past four quarters. But given the likelihood of government spending cuts, General Dynamics might be at the end of a nice run. Wall Street expects General Dynamics to grow profits in 2012 by a very modest 5%. With GD shares trading for nine times current-year estimates, the stock is ripe for a 5%-plus reduction should future guidance disappoint.

Brunswick Corporation

Recreational company Brunswick Corporation (NYSE:BC) reports results before the bell Thursday. If Harley-Davidson is any indication — and I think it is — Brunswick could face a similar fate. In this economy, consumers are cutting back on or simply unable to afford extra items like recreational products. Brunswick has exceeded Wall Street estimates by a wide margin in each of the past two quarters. That said, estimates for the third quarter have been slashed in the past 90 days, but estimates for the current year and 2012 have been increased. Sellers of BC stock can take advantage of the enthusiasm for full-year profits. Shares trade for 29 times current-year estimates. If the company misses or reduces expectations, Brunswick will fall accordingly.

As of this writing, Jamie Dlugosch did not own a position in any of the aforementioned stocks.

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