3 Stocks That Crushed Earnings Season

With so many companies reporting earnings in such a short time period, it can be tough to keep tabs on who rocked the second quarter and who could use a do-over. That's why I asked three of our Foolish analysts to name one company that crushed its quarterly earnings and is still attractively priced today.

Jeff Fischer, advisor, Motley Fool Pro and Motley Fool Options
Intel (Nasdaq: INTC  ) was first in line among the blue chips to put up results far above expectations. The computer chip leader raked in $10.8 billion in second-quarter revenue, up 34% from a year ago. The best quarter in the company's 42-year history produced $2.9 billion in earnings, or $0.51 per share (non-GAAP), topping the average analyst estimate by a whole $0.08 per share -- or nearly 19%.

Looking ahead, grab the salsa, because Intel's chip party continues. The company expects third-quarter revenue of $11.6 billion, plus or minus $400 million (what's $400 million between friends?). The $20 stock trades at less than 10 times the new 2010 average earnings estimate of $2.04 per share, while the S&P 500 is closer to 13 times forward estimates.

The main risk Intel investors face is the possibility for a sharp slowdown in earnings in 2011, even though management believes growth will continue on the heels of emerging market demand. The average analyst only expects 3% earnings growth from Intel in 2011, but if the company proves them wrong, there's upside in the stock. Management says technology is so integral to life now that economic cycles affect it less than before. Plus, the U.S. is in the midst of a corporate upgrade, and emerging market demand should grow for years.

Jim Gillies, advisor, Motley Fool Options, and analyst, Motley Fool Hidden Gems
If you want consistency, how about a debt collector that delivered record cash collections (its metric of most interest) for the sixth consecutive quarter? Portfolio Recovery Associates (Nasdaq: PRAA  ) hasn't let recessionary times and deadbeats' tight wallets slow it down. Portfolio buys charged-off debts for pennies on the dollar, then steadily works to collect more pennies on the dollar. Over the years, the company has diversified its business into buying bankruptcy settlements (where cash repayments have already been settled), and collecting monies owed to other entities (read: the government). At the same time, Portfolio has whittled down its costs of collections.

Net result, a well-run core business, with a growing annuity-like cash flow stream from the bankruptcy portfolios, all served to deliver record earnings for the second quarter, beating analysts' expectations by a whopping 23%. And because the debts that Portfolio buys are seeing repayments over a period of years, I expect continued awesomeness in the coming quarters. At around $67, the stock looks reasonably priced to me.

Matt Argersinger, analyst, Motley Fool Stock Advisor
Of the dozens of companies on my radar this earnings season, no single company's results impressed me more than Ford's (NYSE: F  ) did. When I first started looking at the iconic automaker last year, I thought it was in a good position to turn around its struggling business. What I didn't expect was that in the span of just a few quarters, Ford would pull off a major U-turn and put the pedal to the metal.

Ford's second-quarter revenue rose $8.3 billion from last year to $35.1 billion, while its pre-tax operating income increased from a $600 million loss last year to a $2.85 billion profit. In every geographic region, Ford was profitable, even in economically challenged Europe. Thanks mostly to this strong performance, Ford has been able to pay down an incredible $7 billion in debt since the end of the first quarter.

Just check out Ford's performance in the first half of 2010, compared with other top automakers:

Company

% Change in YTD Sales

2010 YTD Market Share

2009 YTD Market Share

Ford

24.1%

16.8%

15.5%

Chrysler

10.8%

9.3%

9.6%

GM

13%

19.2%

19.5%

Honda Motor (NYSE: HMC  )

9.4%

10.6%

11.1%

Toyota (NYSE: TM  )

7.5%

15.2%

16.3%

Ford's 2010 sales growth leads the pack by a wide margin. More importantly, Ford is the only automaker to gain market share over the past year. Ford's business is no longer in turnaround mode -- it's shifting into overdrive.

The Foolish conclusion
You've heard what our Foolish analysts have to say -- now we want to know what you think! Are you planning on purchasing any of these earnings season champs? Or do you have another stock to suggest? Let us know in the comments box below!

Rich and Jim own shares of Portfolio Recovery Associates. The Motley Fool owns Intel and has written puts on it. Motley Fool Options has recommended buying calls on Intel, which is a Motley Fool Inside Value recommendation. Portfolio Recovery Associates is a Motley Fool Hidden Gems pick. Ford is a Motley Fool Stock Advisor selection. Try any of our Foolish newsletters today, free for 30 days. The Motley Fool has a disclosure policy.


Read/Post Comments (2) | Recommend This Article (4)

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Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On August 17, 2010, at 8:25 PM, okwdvcwdw wrote:

    I agree completely that Ford is about to shift into overdrive with sales and earnings! The life blood of any business is new product and Ford has it coming! Fiesta (already in dealers), new & 20% more fuel efficient engines in FSeries, 2012 Focus coming spring of 2011, new Fusion etc. The current products are high quality, safe, fuel efficient & technology ladden. These new products will drive top line revenue growth and Ford is building on common global platforms will drive costs down. Quality was not mentioned in your article. JD Powers recently named Ford top full line auto company in quality. Ford is ahead of with Toyota and Honda in new vehicle quality. In China and India sales are growing with huge increase. Way to go Ford keep it up.

  • Report this Comment On August 22, 2010, at 1:49 PM, bluffguy wrote:

    Fiesta looks like a great entry and should bring more people to showrooms, but do not expect much in the way of profits. Small cars are still not profitable for US makers. F Series, the new Explorer, Escape, Focus and Edge are where the profits will come from. If and when the economy starts to turn, F-Series and Vans will have steep increase in sales and that is what will fuel profits.

    The margins on F series and Econoline are huge, not so much on small cars.

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