Deutsche Analyst Expects Q4 Earnings to Surprise: 10 Companies to Watch

Earnings season unofficially kicked off on Monday, and although most analysts expect a decrease in Q4 EPS from the third quarter, strategist at Deutsche Bank Binky Chadha says this won't happen, according to Business Insider.

Consensus Q4 EPS is at $23.80 this year, compared to $25.10 in the third quarter. But Chadha thinks Q4 will come in flat with Q3, and here's why (via Business Insider):

  1. Consensus expects a seasonally adjusted decline from Q3 to Q4, which would be the first since Q4 08. Q4 this year was "seasonally strong."
  2. "Positive EPS revisions should follow positive macro data surprises, as has been the case historically." Deutsche Bank's U.S. MAPI (macro data surprise index) turned positive in October, and Europe's recently turned positive.
  3. "Analysts cut EPS much more than guidance was lowered."
  4. Current Q4 EPS consensus of $23.80 is implying a 30% quarter-over-quarter drop in foreign earnings, steeper even than Q4 2008 (-15%).

Business section: Investing ideas
This analyst's reasoning could be interesting to keep in mind given the general bearishness of other analysts as this earnings season begins.

For a look into the companies, we ran a screen on next week's reporting companies for those with a history of consistent quarterly earnings surprises over the last year (beating analyst expectations for several quarters in a row).

Do you think these stocks will surprise the market once more?

List sorted by average earnings surprise. (Click here to access free, interactive tools to analyze these ideas.)

1. Advanced Micro Devices (NYSE: AMD  ) : Operates as a semiconductor company in the United States, Japan, China, and Europe. Market cap of $3.90B. Earnings to be released on 01/19. In Dec. 2010: Reported EPS at 0.14 vs. estimate at 0.11 (surprise of 27.3%). In March 2011: Reported EPS at 0.08 vs. estimate at 0.05 (surprise of 60%). In June 2011: Reported EPS at 0.09 vs. estimate at 0.08 (surprise of 12.5%). In Sept. 2011: Reported 0.15 vs. estimate at 0.1 (surprise of 50%). [Average earnings surprise at 37.45%].

2. Unitedhealth Group: Provides health care services in the United States. Market cap of $56.20B. Earnings to be released on 01/19. In Dec. 2010: Reported EPS at 1.05 vs. estimate at 0.84 (surprise of 25%). In March 2011: Reported EPS at 1.22 vs. estimate at 0.89 (surprise of 37.1%). In June 2011: Reported EPS at 1.16 vs. estimate at 0.94 (surprise of 23.4%). In Sept. 2011: Reported 1.17 vs. estimate at 1.12 (surprise of 4.5%). [Average earnings surprise at 22.5%].

3. Webster Financial: Operates as the holding company for the Webster Bank that provides various banking and financial products and services in southern New England and eastern New York State. Market cap of $1.83B. Earnings to be released on 01/19. In Dec. 2010: Reported EPS at 0.3 vs. estimate at 0.2 (surprise of 50%). In March 2011: Reported EPS at 0.36 vs. estimate at 0.29 (surprise of 24.1%). In June 2011: Reported EPS at 0.36 vs. estimate at 0.35 (surprise of 2.9%). In Sept. 2011: Reported 0.45 vs. estimate at 0.4 (surprise of 12.5%). [Average earnings surprise at 22.38%].

4. Capital One Financial (NYSE: COF  ) : Operates as the bank holding company for the Capital One Bank (USA), National Association and Capital One, National Association, which provide various financial products and services in the United States, Canada, and the United Kingdom. Market cap of $21.26B. Earnings to be released on 01/19. In Dec. 2010: Reported EPS at 1.52 vs. estimate at 1.36 (surprise of 11.8%). In March 2011: Reported EPS at 2.21 vs. estimate at 1.55 (surprise of 42.6%). In June 2011: Reported EPS at 1.97 vs. estimate at 1.71 (surprise of 15.2%). In Sept. 2011: Reported 1.77 vs. estimate at 1.68 (surprise of 5.4%). [Average earnings surprise at 18.75%].

5. Community Trust Bancorp: Operates as the holding company for Community Trust Bank, Market cap of $461.82M. Earnings to be released on 01/18. In Dec. 2010: Reported EPS at 0.6 vs. estimate at 0.49 (surprise of 22.4%). In March 2011: Reported EPS at 0.61 vs. estimate at 0.53 (surprise of 15.1%). In June 2011: Reported EPS at 0.58 vs. estimate at 0.57 (surprise of 1.8%). In Sept. 2011: Reported 0.7 vs. estimate at 0.59 (surprise of 18.6%). [Average earnings surprise at 14.48%].

6. Intuitive Surgical (Nasdaq: ISRG  ) : Designs, manufactures, and markets da Vinci surgical systems for various surgical procedures, including urologic, gynecologic, cardiothoracic, general, and head and neck surgeries. Market cap of $17.60B. Earnings to be released on 01/19. In Dec. 2010: Reported EPS at 3.02 vs. estimate at 2.25 (surprise of 34.2%). In March 2011: Reported EPS at 2.59 vs. estimate at 2.49 (surprise of 4%). In June 2011: Reported EPS at 2.91 vs. estimate at 2.71 (surprise of 7.4%). In Sept. 2011: Reported 3.05 vs. estimate at 2.76 (surprise of 10.5%). [Average earnings surprise at 14.03%].

7. Freeport-McMoRan Copper & Gold (NYSE: FCX  ) : Engages in the exploration, mining, and production of mineral resources. Market cap of $37.01B. Earnings to be released on 01/19. In Dec. 2010: Reported EPS at 1.63 vs. estimate at 1.51 (surprise of 7.9%). In March 2011: Reported EPS at 1.58 vs. estimate at 1.26 (surprise of 25.4%). In June 2011: Reported EPS at 1.49 vs. estimate at 1.33 (surprise of 12%). In Sept. 2011: Reported 1.1 vs. estimate at 1.02 (surprise of 7.8%). [Average earnings surprise at 13.28%].

8. Synaptics: Develops and supplies custom-designed human interface solutions that enable people to interact with various mobile computing, communications, entertainment, and other electronic devices. Market cap of $1.03B. Earnings to be released on 01/19. In Dec. 2010: Reported EPS at 0.72 vs. estimate at 0.68 (surprise of 5.9%). In March 2011: Reported EPS at 0.55 vs. estimate at 0.48 (surprise of 14.6%). In June 2011: Reported EPS at 0.57 vs. estimate at 0.54 (surprise of 5.6%). In Sept. 2011: Reported 0.57 vs. estimate at 0.47 (surprise of 21.3%). [Average earnings surprise at 11.85%].

9. SLM: Provides education finance in the United States. Market cap of $7.03B. Earnings to be released on 01/18. In Dec. 2010: Reported EPS at 0.75 vs. estimate at 0.71 (surprise of 5.6%). In March 2011: Reported EPS at 0.48 vs. estimate at 0.4 (surprise of 20%). In June 2011: Reported EPS at 0.48 vs. estimate at 0.42 (surprise of 14.3%). In Sept. 2011: Reported 0.36 vs. estimate at 0.34 (surprise of 5.9%). [Average earnings surprise at 11.45%].

10. Intel (Nasdaq: INTC  ) : Engages in the design, manufacture, and sale of integrated circuits for computing and communications industries worldwide. Market cap of $129.67B. Earnings to be released on 01/19. In Dec. 2010: Reported EPS at 0.59 vs. estimate at 0.53 (surprise of 11.3%). In March 2011: Reported EPS at 0.56 vs. estimate at 0.46 (surprise of 21.7%). In June 2011: Reported EPS at 0.54 vs. estimate at 0.51 (surprise of 5.9%). In Sept. 2011: Reported 0.65 vs. estimate at 0.61 (surprise of 6.6%). [Average earnings surprise at 11.38%].

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.


Kapitall's Alexander Crawford does not own any of the shares mentioned above. Earnings data sourced from Yahoo! Finance.

The Motley Fool owns shares of JPMorgan Chase and PNC Financial Services Group. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


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  • Report this Comment On January 10, 2012, at 3:07 PM, KGaider wrote:

    Unfortunatly since Q3 2011 FCX has experienced PLUMMETING eps of 12% and it gets worse going forward ....Q4 2011 eps is estimated to be 62 cents vs Q4 2010 1.63.....Q1 2012 95 cents vs Q1 2011 1.58....Q2 2012 1.10 vs Q2 2011 1.49.

    FCX is gonna have eps declines of ~ 50 to 100%+

    so forget the above positive eps surprise data its not even close to being applicable to FCX eps for latter 2011 and well into 2012.

  • Report this Comment On January 10, 2012, at 3:16 PM, KGaider wrote:

    Its easy for a company to beat eps estimates when they keep getting lowered so that the company can beat. For example for FCX Q4 2011 eps estimates started at 96 cents then got dropped to 74 cents then to 72 cents and now its at 62 cents. So how much lower does FCX eps estimate have to be dropped before earnings release so the company can amazingly beat 50 cents ??? Considering in Q4 2010 eps was 1.63 id hardly call any Q4 2011 eps estimate beat a success.

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