PPOD. In the past six years, the company has lost $2 million, $4 million, $7 million, $10 million, $13 million and $22 million.
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Analysts, notes Morningstar's Haywood Kelly, are an optimistic lot, almost never slapping a "sell" rating on any stock they cover. There's ample reason for such optimism, posits Kelly: They mainly work for investment banks, which make money from their dealings with the very companies the analysts are covering. "In such a position," Kelly asks, "who wouldn't err on the rosy side of things?" Growth forecasts, too, are filtered through a rose-colored lens, alleges Kelly, taking particular aim at the numbers hung on the projected expansion of online grocer Peapod (PPOD). In the past six years, the company has lost $2 million, $4 million, $7 million, $10 million, $13 million and $22 million. Hardly encouraging. Especially when, as Kelly explains, it's mathematically impossible to forecast earnings growth for a company whose bottom line is in negative territory. Kelly wonders whether, even in the best of all possible worlds, Peapod can ever turn a tidy profit. Yet analysts covering Peapod pay no heed, anticipating "earnings growth" of 50 percent over the next half-decade. That number sends Kelly into hysterics: "It's grocery delivery, for goodness sakes," he writes. "A nice sideline for a high-school student needing pocket money, but for a publicly traded company?"
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