In these heady economic times, Mr. Market seems to enjoy dogpiling on any stock that dares to fall short of analysts' estimates. To defy that trend, we're here to celebrate stocks that didn't merely meet Wall Street's predictions, but laughed in analysts' faces by leaving their miserly forecasts in the dust. The companies below have all soundly trounced earnings estimates by 20% or more in the last quarter:


CAPS Rating
(out of 5)

EPS Surprise

Est. EPS

Growth Current Qtr.

Est. LT Growth

Conexant Systems (Nasdaq: CNXT)










Joe's Jeans (Nasdaq: JOEZ)





KMG Chemicals (Nasdaq: KMGB)





Smith Micro Software





Source: Yahoo! Finance and CAPS.
NC = not calculable. NA = not available. LT = long-term.

Nonetheless, beating estimates isn't enough to make a stock a winner. Analysts are notoriously lousy at forecasting results, and one-time items can sometimes push earnings over the top. Wall Street professionals typically don't include such extraordinary events in their forecasts.

Rather than focusing only on the past, we'll check whether analysts have a bead on future performance. With help from Motley Fool CAPS, we'll see which of the companies above will have the last laugh.

Laugh, clown, laugh!
The management team installed last year at fabless semiconductor maker Conexant Systems recognized the dangers its balance sheet presented in combating competition from Broadcom (Nasdaq: BRCM) and Texas Instruments (NYSE: TXN), and has been diligently paring it back. It sold off product lines to focus more on its core business while using the proceeds to retire debt. A stock offering around that time had the same purpose.

CAPS member cashsage suggests Conexant's financial history points to an overvalued stock, but notes that it is dipping into the stock offering well once again:

This recent price run-up is useful for the coming secondary share offering which would then be at a higher share price than 2.51 USD. But it would rather serve the interests of the holders of its 250 MUSD convertible notes who already know that they lost much of their principal.

The new, overalloted 16.1 million-share offering at $4 a stub gave Conexant net proceeds of $60 million to buy back debt. But is it doing so at the expense of current shareholders? Let us know on the Conexant CAPS page if this is folly or fabulous.

Working on the railroad
The savage windstorm that recently ripped through the Northeast has me thinking specialty chemicals maker KMG Chemicals might be laughing all the way to the bank next quarter, too. As the primary supplier of the wood preservatives penta and creosote, KMG could possibly enjoy a bump in volume from utilities' needing to repair or replace the vast number of downed and damaged utility poles.

Creosote is primarily used in railroad ties, though, and accounts for more than a third of KMG's revenue. Berkshire Hathaway's (NYSE: BRK-A) "all-in bet" on the future of the American economy with the purchase of the Burlington Northern railroad portends an even better long-term trend for the specialty chemicals maker.

While CAPS member tanail approves of KMG's technical potential, member armyofmeat says its sales and profit profile make it a winner.

The joke's on us
What True Religion (Nasdaq: TRLG) did for overpriced women's jeans, Joe's Jeans wants to do for men's pants, and that's set tongues wagging on the CAPS blogs, where thebank10 finds the apparel maker's Goldman Sachs pedigree worthy of noting, not to mention the bricks-and-mortar expansion under way:

The growth plan for [Joe's Jeans] is in place, thanks in part to their savvy CEO, Marc Crossman. The man knows how to grow a business … Crossman is a former Goldman Sachs Exec with many years experience, and a wealth of contacts and information. It seems the growth plan is set in motion after [Joe's Jeans] reached an agreement with leading outlet mall dealer Premium Outlets (a division of [Simon Property Group]), for 9 new retail stores across the country. This adds to the six regular retail stores [Joe's Jeans] owns itself.

Not everyone is enamored, of course; Pennyperson tells investors to "get real" in thinking Joe's is going to amount to anything. But CAPS members remain solidly behind it, with 97% of those rating the designer duds marking it to outperform the broader averages.

Yucking it up
The market's rally has changed from being mostly fueled by low-quality stocks to dragging most others along based on lower year-over-year comparables. If you think there's some funny business afoot, let us know -- head over to Motley Fool CAPS and sound off.

Berkshire Hathaway and Walt Disney are Motley Fool Inside Value and Stock Advisor picks. The Fool owns shares of Berkshire Hathaway.

Fool contributor Rich Duprey does not have a financial position in any of the stocks mentioned in this article. You can see his holdings here. The Motley Fool has a disclosure policy.