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 Molycorp (NYSE: MCP). Shares of the rare-earth minerals miner soared 27% last week after the company posted a substantially smaller deficit than analysts were expecting.
Yes, Molycorp is still losing a considerable amount of money, but the adjusted loss of $0.15 a share was half as much as Wall Street was projecting. Molycorp also surprised analysts with a better-than-expected 9% sequential uptick in revenue.
SandRidge Energy (NYSE: SD) was also fueled by better-than-forecast results on the bottom line. The oil and gas explorer broke even on an adjusted basis. Sure, SandRidge had been profitable in each of the six previous quarters, but analysts were bracing for a loss of $0.06 a share this time around.
Finally, we have CenturyLink (LUMN 1.12%) coming through with encouraging bottom-line results. Its adjusted profit of $0.76 a share was ahead of the $0.68 a share it posted a year earlier. The pros were targeting flat earnings growth.
It was a busy week for regional telcos as CenturyLink joined Windstream (WINMQ) and Frontier Communications (FTR) in reporting financials. All three companies posted slightly lower revenue as rural landline customers continue to disconnect. Windstream and Frontier also missed on the bottom line. However, after CenturyLink slashed its dividend earlier this year and Frontier cut its rate last year, there were no payout whacks this time around. None of the three stocks lost ground on the week, and that's good news.
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.