Are you looking for companies with bullish sentiment and a history of beating analyst estimates? If so, you may be interested in this list.
Companies report an "earnings surprise" when they release quarterly earnings that beat or miss analyst estimates. If a company consistently beats their analyst estimates, it may indicate that the company is persistently being underestimated by the market.
To be clear, earnings typically refer to after-tax net income.
Whenever a company releases earnings data that beats analyst expectations, the stock will often rise in value to price in the good news. Negative earnings surprises usually lead to a drop in share price.
Of course, analysts cannot perfectly predict the future, so individual earning expectations could be far off the mark -- this is why average analyst estimates are used to determine "surprises."
A few investing ideas
Interested in exploring companies that have a track record of beating analyst estimates?
For ideas, we started with a universe of about 170 stocks that have a history of beating analyst earnings estimates.
From this universe, we collected data on short seller trends, and identified the names that have seen a significant decrease in shares shorted over the last month (i.e., short-sellers have reduced bearish bets).
Short-sellers appear to think the upside potential of these names outweighs the downside. Considering the track record of these stocks relative to analyst earnings estimates, do you agree?
List sorted by average earnings surprise. (Click here to access free, interactive tools to analyze these ideas.)
1. SodaStream International
Shares shorted have decreased from 7.48M to 7.07M over the last month, a decrease which represents about 2.75% of the company's float of 14.92M shares.
2. Zumiez
Shares shorted have decreased from 5.40M to 5.03M over the last month, a decrease which represents about 1.7% of the company's float of 21.80M shares.
3. Genesco
Shares shorted have decreased from 2.47M to 2.21M over the last month, a decrease which represents about 1.12% of the company's float of 23.21M shares.
4. Saks
5. Hi Tech Pharmacal
Shares shorted have decreased from 1.58M to 1.44M over the last month, a decrease which represents about 1.37% of the company's float of 10.19M shares.
6. Cninsure
Shares shorted have decreased from 6.04M to 4.58M over the last month, a decrease which represents about 5.52% of the company's float of 26.47M shares.
7. OmniVision Technologies
Shares shorted have decreased from 5.56M to 4.05M over the last month, a decrease which represents about 2.77% of the company's float of 54.49M shares.
8. W&T Offshore
Shares shorted have decreased from 6.05M to 5.68M over the last month, a decrease which represents about 1.08% of the company's float of 34.39M shares.
9. Isoftstone Holdings
Shares shorted have decreased from 3.71M to 3.33M over the last month, a decrease which represents about 1.28% of the company's float of 29.61M 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.
List compiled by Eben Esterhuizen, CFA. Kapitall's Eben Esterhuizen and Rebecca Lipman do not own any of the shares mentioned above. Earnings surprise and short data sourced from Yahoo! Finance.