Don't settle for ordinary quarterly reports.
I take a look at three companies that beat market expectations every week, 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 Yahoo! (NASDAQ: YHOO). The dot-com pioneer keeps showing its bottom-line sizzle under CEO Marissa Mayer. Yahoo!'s quarterly profit of $0.38 a share obliterated the $0.24 a share that analysts were forecasting. Yahoo! has managed to beat profit estimates by double-digit percentage margins in each of the company's quarters under Mayer.
It's not all rosy at Yahoo!. Top-line growth remains stagnant, as display advertising contracts and the move to outsource its search business through Bing continue to show eroding market share. However, at least Yahoo! is delivering on the bottom line.
Intuitive Surgical (ISRG 1.92%) also bested the prognosticators. The company behind the da Vinci surgical robotic arm has been making operating rooms more efficient by providing more precise incisions on approved procedures and leaving surgeons less fatigued. Intuitive Surgical's net income of $4.56 a share for its latest quarter easily surpassed analysts that felt that the company would earn less than $4 a share.
Intuitive Surgical has routinely landed ahead of Mr. Market, but this is its widest margin of victory in more than two years.
Finally, we have Consumer Portfolio Services (CPSS 2.33%) driving past where the pros were parked. Consumer Portfolio Services provides indirect automobile financing, primarily to folks with dodgy credit histories buying late-model used cars. This is a risky niche when the economy's souring, but business is booming these days.
Consumer Portfolio Services saw its earnings per share pop sixfold to $0.12, just ahead of the $0.11 that Wall Street was forecasting. Revenue rose at a respectable 23% clip.
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.