Surprise! 10 Companies That Like to Keep You Guessing

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Quarterly earnings reports can be big movers for stock prices. When a company fails to meet the market's expectations, its stock will usually drop to discount in the new information. If earnings exceed expectations, a higher stock price will usually be the reward.

If you believe that company characteristics can cause EPS surprises to persist across time, or if you believe underestimation can recur, it could be worth looking at companies who have surprised analysts in the past.

Business section: Investing ideas
We ran a screen on companies reporting earnings in the next five days that have beaten analyst estimates for quarterly EPS over the last four quarters.


We also looked for companies with a EPS/price mismatch. Meaning, based on the assumption that P/E is equal to a constant K, increases in EPS estimates should be matched by proportionate increases in price. When they don't match up, a mispricing may have occurred. That is, stocks seeing faster growth in EPS than price may be undervalued by the market.

Do you think these companies should be trading higher? If so, do you think another earnings surprise will do the trick?
List sorted by earnings date. (Click here to access free, interactive tools to analyze these ideas.)

1. American Express: Provides charge and credit payment card products, and travel-related services worldwide. The company reports earnings on April 18. In March 2011: Reported EPS at $0.97 vs. estimate at $0.93 (surprise of 4.3%). In June 2011: Reported EPS at $1.07 vs. estimate at $0.99 (surprise of 8.1%). In Sept. 2011: Reported EPS at $1.03 vs. estimate at $0.96 (surprise of 7.3%). In Dec. 2011: Reported $1.01 vs. estimate at $0.99 (surprise of 2%). AmEx clocked an average earnings surprise of 5.42%. The EPS estimate for the company's current year increased from $4.23 to $4.25 over the last 30 days, an increase of 0.47%. This increase came during a time when the stock price changed by 0.02% (from $57.27 to $57.28 over the last 30 days).

2. BlackRock: Provides its services to institutional, intermediary, and individual investors. It reports on April 18. In March 2011: Reported EPS at $2.96 vs. estimate at $2.77 (surprise of 6.9%). In June 2011: Reported EPS at $3.00 vs. estimate at $2.88 (surprise of 4.2%). In Sept. 2011: Reported EPS at $2.83 vs. estimate at $2.63 (surprise of 7.6%). In Dec. 2011: Reported EPS at $3.06 vs. estimate at $2.99 (surprise of 2.3%). BlackRock tallied an average earnings surprise of 5.25%. The EPS estimate for the company's current year increased from $13.14 to $13.33 over the last 30 days, an increase of 1.45%. This increase came during a time when the stock price changed by -3.55% (from $205.09 to $197.81 over the last 30 days).

3. Dover (NYS: DOV) : Manufactures and sells industrial products and components, as well as consumables. It reports on April 18. In March 2011: Reported EPS at $0.96 vs. estimate at $0.90 (surprise of 6.7%). In June 2011: Reported EPS at $1.31 vs. estimate at $1.15 (surprise of 13.9%). In Sept. 2011: Reported EPS at $1.21 vs. estimate at $1.12 (surprise of 8%). In Dec. 2011: Reported $1.12 vs. estimate at $1.03 (surprise of 8.7%). Dover scored an average earnings surprise of 9.32%. The EPS estimate for the company's current year increased from $4.89 to $4.91 over the last 30 days, an increase of 0.41%. This increase came during a time when the stock price changed by -5.12% (from $64.21 to $60.92 over the last 30 days).

4. F5 Networks (NAS: FFIV) : Provides technology that optimizes the delivery of network-based applications, and the security, performance, and availability of servers, data storage devices, and other network resources globally. It reports on April 18. In March 2011: Reported EPS at $0.88 vs. estimate at $0.85 (surprise of 3.5%). In June 2011: Reported EPS at $0.97 vs. estimate at $0.91 (surprise of 6.6%). In Sept. 2011: Reported EPS at $1.06 vs. estimate at $0.98 (surprise of 8.2%). In Dec. 2011: Reported $1.03 vs. estimate at $1.01 (surprise of 2%). F5 tallied an average earnings surprise of 5.07%. The EPS estimate for the company's current year increased from $4.48 to $4.49 over the last 30 days, an increase of 0.22%. This increase came during a time when the stock price changed by -7.99% (from $132.73 to $122.12 over the last 30 days).

5. Qualcomm (NAS: QCOM) : Engages in the development, design, manufacture, and marketing of digital wireless telecommunications products and services. It reports on April 18. In March 2011: Reported EPS at $0.86 vs. estimate at $0.80 (surprise of 7.5%). In June 2011: Reported EPS at $0.73 vs. estimate at $0.71 (surprise of 2.8%). In Sept. 2011: Reported EPS at $0.80 vs. estimate at $0.78 (surprise of 2.6%). In Dec. 2011: Reported $0.97 vs. estimate at $0.90 (surprise of 7.8%). Qualcomm scored an average earnings surprise of 5.18%. The EPS estimate for the company's current year increased from $3.75 to $3.77 over the last 30 days, an increase of 0.53%. This increase came during a time when the stock price changed by -0.12% (from $66.75 to $66.67 over the last 30 days).

6. SLM: Provides education finance in the United States. April 18. In March 2011: Reported EPS at $0.48 vs. estimate at $0.40 (surprise of 20%). In June 2011: Reported EPS at $0.48 vs. estimate at $0.42 (surprise of 14.3%). In Sept. 2011: Reported EPS at $0.36 vs. estimate at $0.34 (surprise of 5.9%). In Dec. 2011: Reported $0.51 vs. estimate at $0.49 (surprise of 4.1%). SLM clocked an average earnings surprise of 11.08%. The EPS estimate for the company's current year increased from $2.10 to $2.12 over the last 30 days, an increase of 0.95%. This increase came during a time when the stock price changed by -10% (from $16.50 to $14.85 over the last 30 days).

7. Umpqua Holdings: Operates as the bank holding company for Umpqua Bank that provides commercial and retail banking services to corporate, institutional, and individual customers primarily in the areas of Oregon, northern California, and Washington. It reports April 18. In March 2011: Reported EPS at $0.12 vs. estimate at $0.10 (surprise of 20%). In June 2011: Reported EPS at $0.16 vs. estimate at $0.13 (surprise of 23.1%). In Sept. 2011: Reported EPS at $0.19 vs. estimate at $0.16 (surprise of 18.8%). In Dec. 2011: Reported $0.19 vs. estimate at $0.18 (surprise of 5.6%). Umpqua scored an average earnings surprise of 16.88%. The EPS estimate for the company's current year increased from $0.77 to $0.78 over the last 30 days, an increase of 1.3%. This increase came during a time when the stock price changed by -5.07% (from $13.42 to $12.74 over the last 30 days).

8. Danaher (NYS: DHR) : Designs, manufactures, and markets professional, medical, industrial, and commercial products and services primarily in North America, Europe, Asia, and Australia. It reports April 19. In March 2011: Reported EPS at $0.61 vs. estimate at $0.57 (surprise of 7%). In June 2011: Reported EPS at $0.69 vs. estimate at $0.67 (surprise of 3%). In Sept. 2011: Reported EPS at $0.73 vs. estimate at $0.70 (surprise of 4.3%). In Dec. 2011: Reported $0.81 vs. estimate at $0.78 (surprise of 3.8%). Danaher clocked an average earnings surprise of 4.52%. The EPS estimate for the company's current year increased from $3.30 to $3.31 over the last 30 days, an increase of 0.3%. This increase came during a time when the stock price changed by -1.89% (from $54.92 to $53.88 over the last 30 days).

9. Morgan Stanley: Provides various financial products and services to corporations, governments, financial institutions, and individuals worldwide. It reports April 19. In March 2011: Reported EPS at $0.50 vs. estimate at $0.34 (surprise of 47.1%). In June 2011: Reported EPS at -$0.38 vs. estimate at -$0.64 (surprise of 40.6%). In Sept. 2011: Reported EPS at $1.14 vs. estimate at $0.30 (surprise of 280%). In Dec. 2011: Reported -$0.14 vs. estimate at -$0.57 (surprise of 75.4%). Morgan Stanley tallied an average earnings surprise of 110.77%. The EPS estimate for the company's current year increased from $1.90 to $1.93 over the last 30 days, an increase of 1.58%. This increase came during a time when the stock price changed by -13.86% (from $20.06 to $17.28 over the last 30 days).

10. NCR (NYS: NCR) : Provides technologies and services that enable businesses to connect, interact, and transact with their customers in the financial industry worldwide. It reports April 19. In March 2011: Reported EPS at $0.27 vs. estimate at $0.23 (surprise of 17.4%). In June 2011: Reported EPS at $0.46 vs. estimate at $0.42 (surprise of 9.5%). In Sept. 2011: Reported EPS at $0.53 vs. estimate at $0.47 (surprise of 12.8%). In Dec. 2011: Reported $0.65 vs. estimate at $0.56 (surprise of 16.1%). NCR's average earnings surprised by 13.95%. The EPS estimate for the company's current year increased from $2.31 to $2.39 over the last 30 days, an increase of 3.46%. This increase came during a time when the stock price changed by -0.46% (from $21.53 to $21.43 over the last 30 days).

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.


 

At the time this article was published Kapitall's Rebecca Lipman does not own any of the shares mentioned above.EPS data sourced from Yahoo! Finance. Earnings date from Finviz. The Motley Fool owns shares of Qualcomm. Motley Fool newsletter services have recommended buying shares of BlackRock and creating a write covered strangle position in American Express. The Motley Fool has a disclosure policy.We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.

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