What is real? You may find yourself today going over headlines that claim computer animation studio Pixar (NASDAQ:PIXR) trounced its third-quarter profit targets. Can you really take them seriously?

Let's go over the past few quarters to show you what I mean. See if you can spot the trend in how Pixar's bottom line pans out relative to what Wall Street's number crunchers expect.

Quarter EPS Estimate Eventual EPS % Difference
Q1 2003 $0.11 $0.15 +36%
Q2 2003 $0.22 $0.34 +55%
Q3 2003 $0.13 $0.23 +77%
Q4 2003 $1.26 $1.44 +14%
Q1 2004 $0.39 $0.46 +18%
Q2 2004 $0.37 $0.63 +70%


So with the market's allegedly brightest minds hovering around the $0.24-a-share mark for Pixar's third-quarter earnings -- and the company producing profits of $0.38 -- shouldn't we be seeing some edgier headlines? You know, stuff like:

  • Wall Street Blows It Again
  • Mr. Market's a Mongrel
  • Wake Up, Analysts!

Naturally this stellar quarter came to a close even before The Incredibles handed Pixar its highest grossing opening weekend ever last week. You might want to wipe off that drool after going over the company's income statement and its awe-inspiring 50.4% in net profit margins. You might want to check your inspiration at the door when you begin to think about what the company will be capable of when it no longer has to split its profits with Disney (NYSE:DIS). However, instead of asking yourself why Motley Fool Stock Advisor stock recommendation Pixar is able to beat the proverbial Street so badly every quarter, ask yourself why the Street allows itself to get beaten so submissively. At least when rival Animal House fraternity pledges were saying, "Thank you sir, may I have another?," they had a reason for accepting the paddling. Why these analysts don the leather before the Pixar dominatrix enters the room every three months is baffling.

There are naturally concerns with any company, and Pixar can't escape that. Rival DreamWorks Animation (NYSE:DWA) is putting out a good product these days and its computer animation release schedule is ambitious. Will that, and active slates elsewhere, clutter the market? Pixar's next release is Cars, and the movie trailer is a hoot, but will the studio be able to make the film appealing to both young girls and young boys?

Those are some questions worth chewing on in the future, but today's question is directed toward the market prognosticators. When will you get it right?

Why do you think Pixar always seems to lap the market? Have you seen Pixar's latest release? Will a Hollywood release schedule loaded with big holiday flicks slow it down? All this and more -- on the Pixar discussion board. Only on Fool.com.

Longtime Fool contributor Rick Munarriz owns all of the Pixar releases on DVD. Yes, he owns shares of Pixar too -- and Disney.