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As we move through earnings season, a positive surprise from a company can push its stock up substantially. But how can you tell in advance whether a stock you own is likely to benefit from an earnings surprise?
Past performance may not guarantee future results, but companies that have delivered a string of earnings beats are logical candidates for producing further positive results. So I took a look at the 30 stocks in the Dow Jones Industrials (INDEX: ^DJI ) to find out which ones had the most consistent records of delivering better-than-expected earnings quarter in and quarter out.
Nearly a dozen stocks have beat analysts' earnings expectations for four straight quarters. But many of them only top the estimates by the narrowest of margins. So let's focus on the stocks that beat estimates by the widest average margins.
Boeing (NYSE: BA ) tops the list with an average earnings-per-share beat of more than 38% over the past year. The aircraft maker has gotten a huge number of new orders so far this year, but it needs to execute on delivering those planes on time in order to follow through on its sales success.
Coming in at No. 2 is DuPont (NYSE: DD ) , which weighs in with an average 11% beat. The chemical maker has ridden price increases in its key titanium dioxide market, and it's looking to gain an edge on the competition by expanding its production capacity for the pigment in the next few years.
Next is Intel (Nasdaq: INTC ) , which reports after the bell today. Intel has beaten estimates by an average of almost 10% over the past four quarters. With the PC chip king now seeking to expand more strongly into tablets and smartphones, investors are actually expecting a slight drop in earnings from last year's levels when its first-quarter results come out.
Finally, Cisco Systems (Nasdaq: CSCO ) also posts a nearly 10% average earnings beat. The company faces tough competition on the networking front, but it has done a good job of rebounding from its slowdown and appears on track to continue its winning ways.
Why earnings are important
Earnings are a key component of a stock's value, so you have to stay aware of what your stocks are doing on the earnings front. In its brand-new special report, The Motley Fool has identified five stocks that investors simply have to watch this earnings season. The report is free, so let me invite you to click here and get the scoop before these companies report.