3 Earnings Beats That Caught My Attention Last Weekhttp://www.fool.com/investing/high-growth/2012/01/09/3-earnings-beats-that-caught-my-attention-last-wee.aspx Sean Williams
January 9, 2012
Just because we're not knee-deep in earnings reports yet doesn't exactly mean that everyone is taking an earnings hiatus. During the New Year's shortened week, a handful of companies reported their quarterly results, with three in particular catching my attention for their healthy surprises to the upside.
Although an earnings beat isn't grounds to buy a stock, it can often signal continued strength in a sector or in that stock for months to come. Here are three companies that blew past Wall Street's estimates last week that could be worth keeping an eye on.
Source: Yahoo! Finance.
Underlying the huge earnings beat was another quarter of revenue declines highlighted by NetApp (Nasdaq: NTAP ) cutting back on its needs for Xyratex's storage products. The real highlight of this report was the resurgence in Xyratex's gross margin -- specifically in its network storage services division. For the fourth quarter, gross margin shot to 17.7% from just 13.3% in the year-ago period and up 50 basis points from the third quarter. It's no wonder Xyratex's earnings were so strong based on these gross margin figures. Although it's tough to predict whether Xyratex will move higher from here with little revenue momentum, it's clear that its core customers are still using its products -- and if gross margins continue to tick higher, so will Xyratex.