Don't settle for ordinary quarterly reports.
Every week, I take a look at three companies that beat market expectations, since I believe that it's the biggest factor in a stock beating the market. Leaving Wall Street's pros with stunned expressions can be a good thing. It usually means that the companies have more in the tank than analysts figured. Capital appreciation typically follows.
Let's take a look at a few companies that humbled the pros over the past few trading days.
We can start with Deckers Outdoor (NYSE:DECK).
The company behind Ugg boots and other stylish yet rugged outdoor footwear saw its shares move 15% higher last week after posting better-than-expected results.
It wasn't pretty. Revenue only inched 2% higher, and profitability fell 23% to $2.77 a share as rising costs of sheepskin and other materials mauled margins. However, $2.77 a share is actually well ahead of the $2.57 a share that analysts were modeling.
Dendreon (NASDAQ: DNDN) also came through with solid results. The drugmaker's deficit of $0.26 a share was less than half the red ink that Wall Street was targeting. This is a welcome development at Dendreon, as it had posted larger losses than analysts were banking on for 10 consecutive quarters until late last year.
Shares of Dendreon didn't move on the beat, and there's a good reason for that. Its flagship drug is Provenge, a costly yet compelling treatment for late-stage prostate cancer. Sales were up sequentially -- and that's encouraging -- but Dendreon warned of softness for the current quarter.
Finally, we have ZAGG (NASDAQ:ZAGG). The heavily shorted maker of accessories for tablets and smartphones generated a profit of $0.37 a share after backing out a non-cash impairment charge. Analysts were settling for net income of $0.29 a share.
Net sales had soared 30% at ZAGG, boosted by strong sales of keyboards that attach to tablets. Yes, ZAGG isn't just about its invisibleSHIELD protective film covering anymore.
Moving in the right direction
It's important to keep watching the companies that surpass expectations. Over time, it will be a lucrative experience for investors as the market rewards the overachievers. That's the kind of surprise that we look for in the Rule Breakers newsletter service. Want in? Check out a 30-day trial subscription.