With fourth-quarter earnings season upon us, investors may want to consider companies with a strong history of beating analyst estimates.
If a company consistently beats their analyst estimates, it may indicate that the company is persistently being underestimated by the market.
To be clear, earnings typically refer to after-tax net income.
Whenever a company releases quarterly earnings data that beats analyst expectations, an "earnings surprise," the stock will often rise in value to price in the good news.
Of course, analysts cannot perfectly predict the future, so individual earnings expectations could be far off the mark -- this is why average analyst estimates are used to determine "surprises."
Business section: Investing ideas
We ran a screen on companies reporting earnings this week for those that have a track record of beating analyst earnings estimates over the last four quarters.
Do you think these companies are in store for another earnings surprise? (Click here to access free, interactive tools to analyze these ideas.)
1. SYNNEX: Provides distribution and business process outsourcing services to resellers, retailers, and original equipment manufacturers (OEMs). Earnings results scheduled to be released on 01/10. In Nov. 2010: Reported EPS at 1.04 vs. estimate at 0.96 (surprise of 8.3%). In Feb. 2011: Reported EPS at 0.82 vs. estimate at 0.79 (surprise of 3.8%). In May 2011: Reported EPS at 0.85 vs. estimate at 0.8 (surprise of 6.2%). In Aug. 2011: Reported 1.07 vs. estimate at 0.89 (surprise of 20.2%. [Average earnings surprise at 9.62%].
2. JPMorgan Chase (NYSE: JPM): Provides various financial services worldwide. Earnings results scheduled to be released on 01/13. In Dec. 2010: Reported EPS at 1.12 vs. estimate at 1 (surprise of 12%). In March 2011: Reported EPS at 1.28 vs. estimate at 1.16 (surprise of 10.3%). In June 2011: Reported EPS at 1.27 vs. estimate at 1.21 (surprise of 5%). In Sept. 2011: Reported 1.02 vs. estimate at 0.91 (surprise of 12.1%. [Average earnings surprise at 9.85%].
3. Pinnacle Financial Partners: Operates as the bank holding company for Pinnacle National Bank, which provides commercial banking services to individuals, small-to medium-sized businesses, and professional entities in Tennessee. Earnings results scheduled to be released on 01/17. In Dec. 2010: Reported EPS at 0.07 vs. estimate at -0.04 (surprise of 275%). In March 2011: Reported EPS at 0.06 vs. estimate at 0.04 (surprise of 50%). In June 2011: Reported EPS at 0.14 vs. estimate at 0.1 (surprise of 40%). In Sept. 2011: Reported 0.72 vs. estimate at 0.17 (surprise of 323.5%. [Average earnings surprise at 172.12%].
4. WNS (Holdings): Provides offshore business process outsourcing (BPO) services. Earnings results scheduled to be released on 01/17. In Dec. 2010: Reported EPS at 0.33 vs. estimate at 0.3 (surprise of 10%). In March 2011: Reported EPS at 0.32 vs. estimate at 0.31 (surprise of 3.2%). In June 2011: Reported EPS at 0.22 vs. estimate at 0.2 (surprise of 10%). In Sept. 2011: Reported 0.26 vs. estimate at 0.24 (surprise of 8.3%. [Average earnings surprise at 7.88%].
5. US Bancorp (NYSE: USB): Provides various banking and financial services in the United States. Earnings results scheduled to be released on 01/18. In Dec. 2010: Reported EPS at 0.49 vs. estimate at 0.46 (surprise of 6.5%). In March 2011: Reported EPS at 0.52 vs. estimate at 0.49 (surprise of 6.1%). In June 2011: Reported EPS at 0.6 vs. estimate at 0.53 (surprise of 13.2%). In Sept. 2011: Reported 0.64 vs. estimate at 0.62 (surprise of 3.2%. [Average earnings surprise at 7.25%].
6. Xilinx (Nasdaq: XLNX): Designs, develops, and markets programmable platforms in North America, the Asia Pacific, Europe, and Japan. Earnings results scheduled to be released on 01/18. In Dec. 2010: Reported EPS at 0.58 vs. estimate at 0.52 (surprise of 11.5%). In March 2011: Reported EPS at 0.59 vs. estimate at 0.52 (surprise of 13.5%). In June 2011: Reported EPS at 0.56 vs. estimate at 0.53 (surprise of 5.7%). In Sept. 2011: Reported 0.47 vs. estimate at 0.44 (surprise of 6.8%. [Average earnings surprise at 9.38%].
7. Community Trust Bancorp: Operates as the holding company for Community Trust Bank, Earnings results scheduled to be released on 01/18. In Dec 2010: Reported EPS at 0.6 vs. estimate at 0.49 (surprise of 22.4%). In March 2011: Reported EPS at 0.61 vs. estimate at 0.53 (surprise of 15.1%). In June 2011: Reported EPS at 0.58 vs. estimate at 0.57 (surprise of 1.8%). In Sept. 2011: Reported 0.7 vs. estimate at 0.59 (surprise of 18.6%. [Average earnings surprise at 14.48%].
8. SLM: Provides education finance in the United States. Earnings results scheduled to be released on 01/18. In Dec. 2010: Reported EPS at 0.75 vs. estimate at 0.71 (surprise of 5.6%). In March 2011: Reported EPS at 0.48 vs. estimate at 0.4 (surprise of 20%). In June 2011: Reported EPS at 0.48 vs. estimate at 0.42 (surprise of 14.3%). In Sept. 2011: Reported 0.36 vs. estimate at 0.34 (surprise of 5.9%. [Average earnings surprise at 11.45%].
9. F5 Networks (Nasdaq: FFIV): Provides technology that optimizes the delivery of network-based applications, and the security, performance, and availability of servers, data storage devices, and other network resources in the Americas, EMEA, Japan, and the Asia Pacific. Earnings results scheduled to be released on 01/18. In Dec. 2010: Reported EPS at 0.88 vs. estimate at 0.83 (surprise of 6%). In March 2011: Reported EPS at 0.88 vs. estimate at 0.85 (surprise of 3.5%). In June 2011: Reported EPS at 0.97 vs. estimate at 0.91 (surprise of 6.6%). In Sept. 2011: Reported 1.06 vs. estimate at 0.98 (surprise of 8.2%. [Average earnings surprise at 6.08%].
10. PNC Financial Services Group (NYSE: PNC): Operates as a diversified financial services company. Earnings results scheduled to be released on 01/18. In Dec. 2010: Reported EPS at 1.5 vs. estimate at 1.38 (surprise of 8.7%). In March 2011: Reported EPS at 1.57 vs. estimate at 1.37 (surprise of 14.6%). In June 2011: Reported EPS at 1.67 vs. estimate at 1.46 (surprise of 14.4%). In Sept. 2011: Reported 1.55 vs. estimate at 1.49 (surprise of 4%. [Average earnings surprise at 10.42%].
Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the stocks mentioned above. Analyst ratings sourced from Zacks Investment Research.
List compiled by Eben Esterhuizen, CFA. Kapitall's Eben Esterhuizen and Rebecca Lipman do not own any of the shares mentioned above. EPS data sourced from Yahoo! Finance.
