When a company tops Wall Street's quarterly profit expectations, it's more than just fiscal showboating. We're talking about an event that should excite investors, because it indicates that the pros have no idea what kind of earnings potential a company is packing. Keep them guessing behind you, and stock gains are likely to follow over time.
That said, let's take a closer look at a few of the companies that humbled the prognosticators this past week.
We'll start with Apple Computer
Shares of Apple were kept in check, though, after the company warned that it would fall short here for its fiscal second quarter. The company is guiding the market off its $0.48-per-share target and is now looking to earn closer to $0.42 a share. Yes, Apple has been a perpetual lowballer. One has to go back to the beginning of fiscal 2003 to find the last time the company didn't ultimately report earnings that were stronger than analyst estimates. However, talking the numbers down is no way to start a quarter.
Motley Fool Inside Value
Yes, that's a win for a company. Why? Because it's all about the expectations. The pessimism was already priced into Pfizer. Hey, it's even been priced into most of Pfizer's peers. This is a surprisingly downtrodden sector, and Pfizer's earnings were a victory by most definitions.
Keep watching the companies that lap expectations. Over time, it will be a rewarding experience for investors. That's the kind of surprise that market-watchers relish in the Rule Breakers newsletter service. The strategy has paid off -- the average Rule Breakers selection has trounced the S&P 500's market return. Want in? Check out a 30-day trial subscription.
Either way, come back next Monday to learn about more stocks that blew the market away.
Longtime Fool contributor Rick Munarriz is a fan of toppers. He does not own shares in any of the companies mentioned in this story. The Foo l has a disclosure policy. Rick is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.