The first half of 2012 is now in the books, and as we dive into the heart of third-quarter earnings reports, I can't help but point out that the majority of reports up until now have been better than expected. With so many companies reporting during the weeks that comprise earnings season, it's easy for some earnings reports to fall through the cracks.

Each week this year, I've taken a look at three companies that could be worth further research after either beating or missing their profit expectations. Today, we'll take a gander at three more companies that reported earnings last week. They may have slid under your radar, but they deserve a look:


Consensus EPS

Reported EPS


Popular (Nasdaq: BPOP) $0.41 $0.63 54%
Lattice Semiconductor (Nasdaq: LSCC) ($0.08) ($0.11) (38%)
Bank of New York Mellon (NYSE: BK) $0.53 $0.39 (26%)

Source: Yahoo! Finance.

How can you go wrong with a bank named Popular, right? Well, you can if that bank is a residential and commercial lender based in Puerto Rico, where home prices have been extraordinarily weak.

Popular had a miserable 2011, finishing down more than 55%, but its second-quarter earnings beat gives credence to the theory that a steady turnaround may in fact be under way. Highlights from the quarter include a six-basis-point increase in net interest margin, an $18.1 million reduction in net charge-offs, and a decline in nonperforming loans to their lowest levels in more than three years. Popular has been profitable now in six consecutive quarters as credit quality improves, home prices stabilize, and the company moves to fortify its strong capital position.

From big banks to smaller banks like Popular, the focus is on increasing capital. Bank of America (NYSE: BAC), which also reported blowout earnings last week, has boosted its tier-1 capital ratio by 300 basis point in the past year as it's disposed of $50 billion in assets and restructured its debt. Popular hasn't had as many options available to it with such high levels of underperforming loans, yet it has still managed to boost its tier-1 risk-based capital to a healthy 16.31%. No bank is a sure thing, but I really like the rebound potential for Popular.

Lattice Semiconductor
Another report, another earnings miss for programmable-logic-device solutions company Lattice Semiconductor -- yet no major sell-off this time. Might investors finally be coming to terms with Lattice's long-term potential? I think so.

For the quarter, Lattice slightly outpaced the low end of its previous revenue range, but it continued to forecast macroeconomic headwinds and European weakness as a reason for flat to slightly down sales in the upcoming quarter. Despite this, Lattice continues to offer exceptionally good value, all things considered.

For one, Lattice formed a foundry alliance during the quarter with United Microelectronics (NYSE: UMC), which should help streamline production and reduce costs while giving the company a pathway to expand the line of memory technology products acquired when it purchased SiliconBlue. Second, Lattice ended the quarter with $184.5 million in cash and no debt. Being well capitalized gives the company acquisition flexibility and, in turn, makes it an attractive takeover target. Finally, Lattice is focused on the right regions. In the second quarter, Asia accounted for 70% of sales, with European total sales dropping to just 17% from 22% in the previous year. Europe and the U.S. may be hampering sales growth, but when the lion's share of revenue comes from high-growth Asia, my concern lessens dramatically. If you haven't already, please give Lattice another look.

Bank of New York Mellon
Historically low lending rates are a great thing for consumers, but they are an absolute nightmare for asset management and trust banks like Bank of New York Mellon that rely on robust net interest margin spreads to increase investment inflows.

In its recent quarter, BNY Mellon reported a 37% drop in net income, primarily tied to a $212 million lawsuit settlement payment. Beyond this one-time charge, things are beginning to slowly shape up.

Total assets under custody and administration rose 3% from last year to $27.1 trillion, with nonperforming assets dropping dramatically to $294 million in its latest quarter from $351 million in the year-ago quarter. BNY Mellon's critical Basel III Tier I common equity ratio rose dramatically to 8.7% from 6.5% last year, signifying its aggressive risk-shedding tactics are working. BNY Mellon also repurchased 12.2 million of its own shares during the quarter and still has approximately $874 million left under its share repurchase agreement.

Historically low interest rates may temporarily hamper revenue growth, but rates can't stay this low forever. When rates do rise, BNY Mellon will be well positioned to take advantage and investors may look back and realize what a fantastic value this trust bank really is.

Foolish roundup
Sometimes an earnings beat or miss isn't as cut-and-dried as it appears. I've given my two cents on what's next for each of these companies -- now it's your turn to sound off. Share your thoughts in the comments section below, and consider adding these stocks to your free and personalized watchlist.

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