Earnings Season Disappoints: Here Are the Companies Bucking the Trend

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Have you been disappointed by the fourth-quarter earnings season? It is certainly shaping up to be a let-down, with companies missing or just hitting already muted expectations. But it is not a total loss. Earnings have been middle-of-the-road enough to keep the S&P on track, rallying upwards.

Eddy of Crossing Wall Street shares his earnings expectations for the remainder of the year. Although earnings for the S&P 500 are expected to rise throughout the year, "I think earnings may not be as strong as some people expect."

Specifically, analysts already expect a large jump in the fourth quarter of 2012. "Trailing fourth-quarter earnings are expected to rise from $101.08 to $105.37 during the final three months of the year. I just don't see what could cause a jump like that." Instead, he expects earnings to round out between $100 and $105 for a few quarters.

Business section: Investing ideas
Earnings have been watered down and generally disappointing, so we wanted to take a look at companies that have a shot of bucking the trend.

Below are companies with a strong history of beating analyst expectations. Past performance is no guarantee of future results, but it does provide us with a good starting point.

To improve the quality of our list, we also searched for companies with an increase in short covering. This means short-sellers, who profit when the value of a company drops, are becoming more bullish about the company's prospects.

Do you think analysts will continue to underestimate the earnings potential for these companies in 2012? (Click here to access free, interactive tools to analyze these ideas.)

1. Glu Mobile (NAS: GLUU) : Engages in the design, marketing, and sale of casual and traditional mobile games worldwide. In March 2011: Reported EPS at -0.02 vs. estimate at -0.07 (surprise of 71.4%). In June 2011: Reported EPS at -0.01 vs. estimate at -0.04 (surprise of 75%). In Sept. 2011: Reported EPS at -0.02 vs. estimate at -0.12 (surprise of 83.3%). In Dec. 2011: Reported -0.02 vs. estimate at -0.1 (surprise of 80%. [Average earnings surprise at 77.42%]. Shares shorted have decreased from 8.31M to 7.60M over the last month, a decrease which represents about 1.56% of the company's float of 45.39M shares.

2. Titan Machinery (NAS: TITN) : Operates a network of full service agricultural and construction equipment stores in the United States. In Jan. 2011: Reported EPS at 0.57 vs. estimate at 0.36 (surprise of 58.3%). In April 2011: Reported EPS at 0.4 vs. estimate at 0.22 (surprise of 81.8%). In July. 2011: Reported EPS at 0.3 vs. estimate at 0.26 (surprise of 15.4%). In Oct. 2011: Reported 0.61 vs. estimate at 0.5 (surprise of 22%. [Average earnings surprise at 44.37%]. Shares shorted have decreased from 1.47M to 1.17M over the last month, a decrease which represents about 1.87% of the company's float of 16.01M shares.

3. ValueClick: Provides performance-based online advertising campaigns and programs primarily in the United States and the United Kingdom. In March 2011: Reported EPS at 0.21 vs. estimate at 0.18 (surprise of 16.7%). In June 2011: Reported EPS at 0.21 vs. estimate at 0.2 (surprise of 5%). In Sept. 2011: Reported EPS at 0.47 vs. estimate at 0.21 (surprise of 123.8%). In Dec. 2011: Reported 0.35 vs. estimate at 0.29 (surprise of 20.7%. [Average earnings surprise at 41.55%]. Shares shorted have decreased from 8.65M to 7.21M over the last month, a decrease which represents about 1.87% of the company's float of 77.15M shares.

4. Hi Tech Pharmacal (NAS: HITK) : Develops, manufactures, markets, and sells generic, prescription, over-the-counter (OTC), and nutritional products in liquid and semisolid dosage forms in the United States. In Jan. 2011: Reported EPS at 0.79 vs. estimate at 0.63 (surprise of 25.4%). In April 2011: Reported EPS at 0.98 vs. estimate at 0.71 (surprise of 38%). In July 2011: Reported EPS at 1.05 vs. estimate at 0.84 (surprise of 25%). In Oct. 2011: Reported 1.04 vs. estimate at 0.77 (surprise of 35.1%. [Average earnings surprise at 30.87%]. Shares shorted have decreased from 1.37M to 1.13M over the last month, a decrease which represents about 2.36% of the company's float of 10.19M shares.

5. Cninsure: Provides insurance brokerage and agency services, and insurance claims adjusting services in the People's Republic of China. In Dec. 2010: Reported EPS at 0.37 vs. estimate at 0.34 (surprise of 8.8%). In March 2011: Reported EPS at 0.24 vs. estimate at 0.23 (surprise of 4.3%). In June 2011: Reported EPS at 0.33 vs. estimate at 0.29 (surprise of 13.8%). In Sept. 2011: Reported 0.33 vs. estimate at 0.18 (surprise of 83.3%. [Average earnings surprise at 27.55%]. Shares shorted have decreased from 2.82M to 2.44M over the last month, a decrease which represents about 1.44% of the company's float of 26.47M shares.

6. Taleo (NAS: TLEO) : Provides on-demand talent management software solutions. In Dec 2010: Reported EPS at 0.23 vs. estimate at 0.18 (surprise of 27.8%). In March 2011: Reported EPS at 0.23 vs. estimate at 0.17 (surprise of 35.3%). In June 2011: Reported EPS at 0.27 vs. estimate at 0.21 (surprise of 28.6%). In Sept. 2011: Reported 0.3 vs. estimate at 0.27 (surprise of 11.1%. [Average earnings surprise at 25.7%]. Shares shorted have decreased from 3.13M to 2.73M over the last month, a decrease which represents about 1.06% of the company's float of 37.63M shares.

7. Rogers Corporation: Rogers Corporation manufactures and supplies a range of specialty materials and components worldwide. In Dec. 2010: Reported EPS at 0.65 vs. estimate at 0.39 (surprise of 66.7%). In March 2011: Reported EPS at 0.57 vs. estimate at 0.52 (surprise of 9.6%). In June 2011: Reported EPS at 0.73 vs. estimate at 0.69 (surprise of 5.8%). In Sept. 2011: Reported 0.85 vs. estimate at 0.79 (surprise of 7.6%. [Average earnings surprise at 22.42%]. Shares shorted have decreased from 988.90K to 826.92K over the last month, a decrease which represents about 1.02% of the company's float of 15.84M shares.

8. Ebix (NAS: EBIX) : Provides on-demand software and e-commerce solutions to the insurance industry. In Dec. 2010: Reported EPS at 0.42 vs. estimate at 0.33 (surprise of 27.3%). In March 2011: Reported EPS at 0.37 vs. estimate at 0.33 (surprise of 12.1%). In June. 2011: Reported EPS at 0.53 vs. estimate at 0.37 (surprise of 43.2%). In Sept. 2011: Reported 0.41 vs. estimate at 0.39 (surprise of 5.1%. [Average earnings surprise at 21.93%]. Shares shorted have decreased from 11.18M to 10.61M over the last month, a decrease which represents about 1.65% of the company's float of 34.54M shares.

Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the stocks mentioned above. Analyst ratings sourced from Zacks Investment Research.


Kapitall's Rebecca Lipman does not own any of the shares mentioned above. EPS and short data sourced from Yahoo! Finance.

At the time this article was published The Motley Fool owns shares of Ebix. The Fool owns shares of and has written calls on Ebix. Motley Fool newsletter services have recommended buying 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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