No one knows a company better than those who run it. While they're not always right -- they miss their own estimates plenty of times -- these executives have more insight than anyone else into how their companies will behave in the future.

Sometimes, we check whether insiders are buying stocks. Other times, we see whether companies are buying back their own shares. These can both be bullish signs for a company. This week, we'll look at companies that have raised their revenue guidance for the coming quarter or fiscal year.

Tap into CAPS
Let's turn to the Motley Fool CAPS community intelligence database to pinpoint promising stocks. The system asks professional and novice investors alike to rank thousands of stocks. CAPS overweights the opinions of the most successful and accurate among them, crunching those numbers to assign each company a rating from one star (the worst) to five stars (the best).

CAPS harnesses the knowledge of more than 25,000 amateur and professional analysts to get the inside scoop on whether these companies are here to stay, or a flash in the pan.

Here are some companies that have recently raised their revenue guidance, and their corresponding ratings from the CAPS community:


Forecast Period

New Guidance

Analyst Forecast

Year Ago Actual Results

CAPS Rating


Q4 2006

$28 million

$26.6 million

$26.8 million


Network Equipment (NYSE:NWK)

Q4 2006

$24.7 million-$25.2 million

$23.7 million

$13.4 million


Matrix Service (NASDAQ:MTRX)

FY 2007

$630 million-$640 million

$559.8 million

$493.9 million



Q1 2007

$19.8 million-$20.2 million

$18.7 million

$14.1 million


Source: Company SEC filings; Yahoo! Finance. CAPS Ratings courtesy of Motley Fool CAPS.

As always, this is not a list of recommendations to buy -- just a starting point for further research. Indeed, as we noted last week, it's becoming harder to find companies raising their earnings guidance. This week, we see only a handful of companies comfortable enough to lift their revenue and sales guidance.

Raising their voices
Even though it just went public late last year, video-software provider DivX has generated intense discussion in the CAPS community. The company makes compression/decompression software -- known as a codec -- that squeezes video into Internet-friendly sizes with little loss of quality. It's also widely used in DVD players, which has allowed DivX to generate 80% of its revenue from licensing its technology to equipment manufacturers.

As industry analyst and research firm Netscribes notes, "The popularity growth of the company has been driven primarily by its usage for playing pirated movies, a factor that the company intends to leverage to become a de facto standard for all digital video compression."

Nearly 300 CAPS players believe this up-and-coming company will outperform the market. Almost one-fourth of its cheering section comes from All-Stars -- players who consistently outrank 80% of all other CAPS investors. What are these top-dog players saying?

  • Malstryx, with a 99.90% rating, says: "Love the product, should do well as more people become aware of it. Much more functional then Real or WMP for watching movies."
  • Similarly, top-ranked lojet, with a 90.76% rating, agrees. "They are in the fast-paced software/technical business, and bigger competition could break them (or buy them!) but they seem to be in a niche and Internet video is exploding right now. As more people go broadband this seems to be a great area."

But not everyone agrees that the future of video compression belongs to DivX. Paxz, for example, points out that "XVID, an open-source codec, offers a free and viable alternative to [the] DIVX algorithm." Another CAPS All-Star, kristm, concurs, noting that DivX occupies "a market filled with free open standards and proprietary standards from power players like Microsoft, Real Networks, and Apple. Where's the moat and where's the difference?"

That's what some of our CAPS players think about DivX. Who's got the better argument -- the bulls or the bears? If you'd like to learn more about these stocks, or offer your own insights on them or any other stock, CAPS is a great place to start. Join today, absolutely free.

Fool contributor Rich Duprey does not own any of the stocks mentioned in this article. You can see his holdings here. Microsoft is a Motley Fool Inside Value choice. The Motley Fool has a disclosure policy.