Every week, I take a look at a few companies that lapped their profit targets. Leaving Wall Street's pros with quizzical looks on their faces can be a good thing. It usually means that the companies have more in the tank than analysts figured and capital appreciation often follows.
Let's take a look at a few companies that humbled the prognosticators over the past few trading days.
We can start with Sealy (NYSE: ZZ). The leading mattress maker didn't wake up grumpy when it posted a quarterly profit of $0.17 a share, comfortably ahead of the $0.10 a share that sheep-counting analysts were expecting.
Investors were surprised, especially after premium specialty mattress makers Select Comfort (Nasdaq: SCSS) and Tempur-Pedic (NYSE: TPX) came up short in their latest quarters. Sealy still has gobs of debt, negative book value, and a domestic slowdown to reverse, but it's nice to know that things could have been worse.
Chattem (Nasdaq: CHTT) also cleaned up nicely. The company behind drugstore staples like Gold Bond, Icy Hot, and Aspercreme earned $1.01 a share before stock-based compensation and charges related to a product recall. Investors were braced for a profit of just $0.95 a share.
Finally, we have Pier 1 (NYSE: PIR) with a rousing hero's welcome for its latest port of call. The home-furnishings retailer earned $0.16 a share, more than double the $0.07-a-share profit target that Wall Street had set up.
These obviously aren't ideal times for the industry, but companies like Pier 1, Williams-Sonoma (NYSE: WSM), and Bed Bath & Beyond (Nasdaq: BBBY) have come through with market-topping reports at a time when many of their rivals are buckling.
So keep watching the companies that lap expectations. Over time, it will be a worthwhile experience for investors, as the market rewards the overachievers. That's the kind of surprise we look for in the Rule Breakers newsletter service. Want in? Check out a 30-day trial subscription.
Either way, come back next Monday to learn about more stocks that blew the market away.
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