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 Lennar (LEN -1.51%). The homebuilder saw its quarterly profit more than triple to $0.26 a share. Analysts were only holding out for net income of $0.15 a share.
Is anyone really surprised that a real estate developer is rocking these days? Home prices are firming, and mortgage rates remain at attractive levels. Even a laggard -- Lenner peer KB Home (KBH 1.03%) -- came through with a much smaller deficit than Wall Street was forecasting.
The news should get even better for Lennar in the coming quarters, as new orders surged 34% to 4,055 homes.
We also have Horizon Pharma (HZNP) besting the pros. The young drugmaker posted an adjusted loss of $0.34 a share, well short of both the $0.97 a share it posted a year earlier and the $0.47 a share that Wall Street was modeling.
Horizon is just starting to gain traction on its two marquee drugs targeting therapeutic needs in arthritis, pain, and inflammatory diseases. Horizon just initiated the full commercial launch of Rayos to rheumatologists and key primary care physicians last month, and Duexis saw its total prescriptions spike 57% sequentially during the period.
Finally, we have Adobe Systems (ADBE -1.73%) moving nearly 4% higher on the week after posting encouraging fiscal results. The desktop publishing software giant's quarterly net income of $0.35 a share landed well ahead of the $0.31 a share that the prognosticators were expecting. Wall Street does see revenue and profitability declining at Adobe this year. These aren't the best of times for the software giant. Flash is losing support as a video standard. Photoshop remains the premium photo-editing product of choice, but a growing number of free cloud-based solutions are wooing penny-pinchers and mainstream users who don't need Adobe's firepower.
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.
