Why settle for ordinary quarterly reports?
Every week I take a look at three companies that beat market expectations, since I believe that it's the biggest factor in a stock beating the market. Leaving Wall Street's pros with puzzled looks on their faces can be a good thing. It usually means that the companies have more in the tank than analysts figured. 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 Amazon.com (Nasdaq: AMZN ) . Shares of the world's leading online retailer soared 27% on Friday, after the e-tailer obliterated Wall Street predictions. The pros expected third-quarter earnings to rise 22%. Instead, Amazon.com's net income catapulted 68% higher, to $0.45 a share.
T. Rowe Price (Nasdaq: TROW ) also made out nicely. The mutual fund giant posted a profit of $0.50 a share, comfortably ahead of analyst estimates of $0.46 a share. It's true that T. Rowe Price earned more a year ago, but the fund operator feels that the worst is behind it; it grew its asset base nicely during the quarter's rally. T. Rowe's showing was a welcome surprise after rival Janus Capital Group (NYSE: JNS ) simply met expectations a day earlier.
Finally, we have Yahoo! (Nasdaq: YHOO ) checking in higher. The company's quarterly profit of $0.13 a share -- or $0.15 a share on a non-GAAP basis -- blew past Mr. Market's best guess of $0.07 a share. The online advertising market may not be hitting on all cylinders, but it bears pointing out that its three largest players -- Google (Nasdaq: GOOG ) , Yahoo!, and Microsoft (Nasdaq: MSFT ) -- all surpassed Wall Street's bottom-line projections.
So keep watching the companies that surpass expectations. Over time, it will be a profitable experience for investors, as the market rewards the overachievers. That's the kind of surprise we look for in the Motley Fool 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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