Every week I take a look 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 Gander Mountain (Nasdaq: GMTN). The retailer for outdoor enthusiasts may have earned just $0.03 a share in its latest quarter, but that is actually three times what Wall Street was expecting. Analysts ... they're such poor marksmen these days. Gander's profit reverses a loss from last year's fiscal third quarter.
This is not necessarily good news for fellow outdoor gear chain Cabela's (NYSE: CAB). Gander's bottom-line win is the result of prudent corporate cost-cutting and last December's acquisition of Overton, which beefed up the company's nascent direct-retailing business. Comps actually took a hit at the store level.
AutoZone (NYSE: AZO) is another topper. The auto parts retailer shifted into high gear in scoring net income of $2.23 a share in its fiscal first quarter, pulling ahead of both the $2.02 a share it earned last year and the $2.18 per share that Mr. Market was looking for.
These quarterly pit stop checks have worked out well for shareholders lately. AutoZone has now clocked in ahead of expectations in four of the past five quarters. Rivals O'Reilly Automotive (Nasdaq: ORLY) and Advance Auto Parts (NYSE: AAP) also narrowly topped their targets. The theory here is that drivers who can't afford to snap up new cars are spending more to maintain their older vehicles.
Finally, we have Kroger (NYSE: KR) looking good as it checks out. The grocer earned $0.39 a share in its latest quarter, beating analyst projections as well as last year's profitability. Outdoor gear, auto parts, and groceries faring well? I guess "camping trip" is on a lot of our minds.
Keep watching the companies that lap expectations. Over time, it will be a rewarding experience for investors, as the market rewards overachievers. That's the kind of surprise we look for in the Motley Fool Rule Breakers newsletter service. Want in? Get started today with a free, all-access, 30-day trial subscription.
And come back next Monday to learn about more stocks that blew the market away.
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