3 Earnings Surprises That Caught My Attention Last Week

We're basically two months into the new year, and surprisingly the majority of earnings reports continue to be better than Wall Street had predicted. With so many companies reporting during the several weeks that comprise earnings season each quarter, earnings reports can fall through the cracks.

Each week this year I've taken a look at three companies that could be worth further research after either beating or missing their profit expectations. Today, we're going to take a look at three more companies that reported earnings last week and may have slid under your radar, and that you should give a second look:

Company

Consensus EPS

Reported EPS

Surprise %

HomeAway (Nasdaq: AWAY  ) $0.09 $0.11 22%
Intuit (Nasdaq: INTU  ) $0.45 $0.51 13%
Alpha Natural Resources (NYSE: ANR  ) $0.26 ($0.07) (127%)

Source: Yahoo! Finance.

HomeAway
Dorothy from The Wizard of Oz said it best: "There's no place like home." I can't say for sure if consumers are taking fewer vacations, but HomeAway's results would clearly indicate so.

Although Yahoo! Finance shows an adjusted EPS beat excluding one-time charges, HomeAway actually lost money during the quarter on a GAAP basis despite a 28.5% jump in revenue. The business is growing in that listing revenue popped by 26%, adjusted EBITDA rose 84%, and free cash flow was up 19%. In the end, though, it comes down to whether or not the business can be profitable, and in that sense, HomeAway has a lot of work to do.

For the full-year, HomeAway lost $0.31 and it has aggressive marketing expense growth to thank for that. The company's first-quarter and full-year revenue guidance also left a lot to be desired, falling mildly short of analysts' expectations. At 49 times forward earnings and a staggering 32 times cash flow, I think I'd rather be home too!

Intuit
I really don't want to even begin thinking about the nightmare that is my taxes, but Intuit shareholders should be ready for their bread-and-butter quarter.

The maker of my favorite tax software, TurboTax, reported a 62% rise in net income last week on strength in financial management software sales. Intuit also noted that sales for TurboTax were strong through the first month of the year and expenses for the company are well under control.

Although there isn't much barrier to entry in tax preparation software, TurboTax still holds the lion's share of the market. Rival H&R Block (NYSE: HRB  ) chose to enter the do-it-yourself software preparation game late, and both it and now privately held Jackson-Hewitt suffered greatly because of that choice. TurboTax is a go-to name for a lot of do-it-yourselfers (like myself), and I definitely feel it deserves the rich forward earnings multiple of 17 that it currently commands. Don't be surprised if Intuit beats estimates again in its third quarter.

Alpha Natural Resources
The offer still stands: If anyone wants to put a lump of coal in my stocking for Christmas, I'll gladly accept.

Between tougher EPA regulations and cheaper natural gas prices, electric utilities have begun making the switch to alternative forms of electrical generation outside of coal. Alpha's 127% miss is a testament to this, but it's also not out of the ordinary in the sector. Peabody Energy (NYSE: BTU  ) , arguably one of the largest coal producers, missed on EPS by $0.51 for similar reasons when it reported results last month.

What I feel we need to be reminded of here is that coal is responsible for almost half of all electricity generation in the United States. A milder winter has also played a part in the cheapening of natural gas. No one can predict the weather in this country to save their lives (my personal opinion there), and a mild winter can just as quickly turn into a blizzard-filled winter next year. Coal companies represent extraordinarily cheap values right now, with many trading below book value. Alpha Natural is another name that could do very well over the long term when natural gas prices rebound and investors come to their senses.

Foolish roundup
Sometimes an earnings beat or miss isn't as cut-and-dried as it appears. I've given my two cents on what's next for each of these companies; now it's your turn to sound off. Share your thoughts in the comments section below, and consider adding these stocks to your free and personalized watchlist.

If you'd like the inside track on three more companies that could wind up in the earnings beat column, then I suggest you get a copy of our latest special report, "3 American Companies Set to Dominate the World." Did I mention the best part? This report is completely free, so don't miss out!

Fool contributor Sean Williams has no material interest in any companies mentioned in this article. He is a total procrastinator when it comes to his taxes. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.

Motley Fool newsletter services have recommended buying shares of HomeAway. Try any of our Foolish newsletter services free for 30 days. We Fools don't 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 that always exceeds expectations.


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11/24/2014 4:05 PM
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