Why settle for ordinary quarterly reports?
I take a look every week at three companies that beat market expectations, since I believe that’s the biggest factor in a stock beating the market. Leaving Wall Street's pros with quizzical looks on their faces can be a good thing. It usually means that the companies have more in the tank than analysts figured, and capital appreciation often follows.
Let's take a look at a few companies that humbled the prognosticators over the past few trading days.
We can start with Tiffany (NYSE: TIF). The upscale jewelry retailer posted a 21% improvement in adjusted quarterly earnings, to $0.63 a share. Wall Street was expecting a profit of only $0.55 a share.
One might think that this dicey economy would be disastrous to a big-ticket chain like Tiffany, but that just hasn't been the case. The company has beaten the market's bottom-line guesstimates in each of the past eight quarters. This performance bodes well for other high-end players like Blue Nile (Nasdaq: NILE) and Signet (NYSE: SIG). For those scoring at home, Signet reports its interim earnings tomorrow.
Big Lots (NYSE: BIG) is another topper. The thrift-store chain, which buys distressed merchandise in "big lots," earned $0.32 a share in its latest quarter. That is considerably better than both the $0.21 a share it earned a year ago and the $0.27 a share that analysts were banking on.
Between Tiffany on the high end and Big Lots on the value end, it's clear that tales of retail's complete failure are exaggerations. Big Lots has actually bested the pros in 10 consecutive quarters. Similar bargain-bin specialists that rely on penny-pinching shoppers to keep their registers ringing, like Overstock.com (Nasdaq: OSTK) and Family Dollar (NYSE: FDO), will hope they too can cash in on that trend.
Finally, Marvell Technology (Nasdaq: MRVL) posted a fiscal second-quarter profit of $0.24 a share, just ahead of the $0.22 a share that Mr. Market was looking for. Unfortunately, the chip designer also posted a bleak near-term outlook. As important as it is for a stock to top estimates, it is even more critical for shareholders to see the momentum continue.
So, keep watching the companies that lap expectations. Over time, it will be a rewarding experience for investors as the market rewards the overachievers. That's the kind of surprise we look for in the Motley Fool Rule Breakers newsletter service. Want in? Check out a 30-day trial subscription.
Either way, come back next Monday to learn about more stocks that blew the market away.
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