3 Earnings Reports That Caught My Attention Last Week

After wrapping up an incredibly strong first quarter of earnings reports, we're about three-quarters of the way through the second quarter with many reports still coming in better than expected. With so many companies reporting during the weeks that comprise earnings season, it's easy for some earnings reports to 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'll take a gander at three more companies that reported earnings last week. If they slid under your radar, they deserve a look:

Source: Yahoo! Finance.

Guidewire Software
You know how there's never anything exciting going on in the property and casualty side of the insurance business? Well, you can throw that preconception out the window, thanks to Guidewire Software and its complete suite of products designed to assist P&C insurers with everything from underwriting to claims.

Based on the beating Guidewire has given Wall Street analyst estimates in its first two quarters as a publicly traded company, it should be in jail for assault. It followed up a 667% earnings beat last quarter with a 600% trouncing in the third quarter, with strong growth noted across all segments. Total revenue rose 28%, with license, maintenance, and service revenue up 22%, 39%, and 31%, respectively. Best of all, management remains optimistic about the company's near-term outlook, as cash vaulted higher to $201.9 million.

Although Guidewire looks arguably pricey at 67 times forward earnings, it has turned two projected quarterly losses into profits since going public, and its earnings growth could easily make its valuation appear more reasonable over the coming quarters.

Comverse Technology
Unlike with Guidewire Software, I'd probably recommend for shareholders of Comverse Technology a stress-relief kit that involves banging your head against a blunt object until you completely forget why you're banging your head against that object in the first place.

It was another nightmarish quarter for shareholders, with Comverse's business software solutions and value-added services business showing sluggish results. Comverse's management continues to blame revenue recognition and an ongoing restructuring effort as reasons for the weak results. And despite all of this, I still see amazing value waiting to be unlocked for shareholders.

For one thing, the company holds a majority stake in Verint Systems (Nasdaq: VRNT), a workforce optimization company that reported a 13.4% rise in sales just a day before Comverse reported its own results. Comverse is looking for ways to maximize value for its and Verint's shareholders by potentially putting Verint up for sale, or possibly even merging its own businesses with Verint. Also, the company is planning to spin off its Comverse BSS and VAS segments at some point in the near future, which should unlock shareholder value. I do have confidence that things will turn around here, but it will definitely take patience... and a hard head.

Harry Winston Diamond
Don't look now, but high-end buyers who have been a pillar for luxury stocks since the recession just might be getting tired of spending their money.

Harry Winston Diamond reported what look like strong results on the surface: Revenue rose by 34% and profits more than tripled to $0.14 from $0.04 in the year-ago period. But dig a bit deeper and you'll start to find inclusions in what looked like a relatively flawless report.

Management noted that while it expects luxury buying of high-end jewelry and watches to remain strong, the European debt crisis and a growth slowdown in China are expected to affect its business in the near-term. More worrisome was the steep drop-off in the price-per-carat of the rough diamonds it sold. Overall prices fell to $88/carat from $132/carat in the year-ago period because of the company's choice to hold back higher-end diamonds and move lower-quality inventory, according to management.

We're beginning to see this luxury weakness spread throughout the high-end jewelry sector. Tiffany (NYSE: TIF) missed earnings for a second consecutive quarter last month and cautioned that weakening sales trends in the Americas would drive its earnings forecast lower. This is a trend that could worsen over the coming quarters and makes the high-end jewelry sector a dicey near-term investment.

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.

• Add Guidewire Software to My Watchlist.
• Add Comverse Technology to My Watchlist.
• Add Harry Winston Diamond to My Watchlist.

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