In these heady economic times, Mr. Market seems to enjoy dogpiling on any company that dares to fall short of analysts' estimates. To defy that trend, we're here to celebrate companies that didn't merely meet Wall Street's predictions, but laughed in analysts' faces by leaving their forecasts in the dust. The companies below soundly trounced earnings estimates by 20% or more for the third quarter:


CAPS Rating

EPS Surprise

Estimated EPS Growth Current Quarter

Estimated 5-Year Growth

American International Group (NYSE:AIG)





Cabela's (NYSE:CAB)





Dynamic Materials (NASDAQ:BOOM)





Goldman Sachs (NYSE:GS)





NCI Building Systems (NYSE:NCS)






Nonetheless, beating estimates isn't enough to make a stock a winner. Analysts are notoriously lousy at forecasting results, and one-time items can sometimes push earnings over the top. Wall Street professionals typically don't include such extraordinary events in their forecasts.

Rather than focusing only on the past, we'll check whether analysts have a bead on future performance. With help from Motley Fool CAPS, we'll see which of the top companies listed above will have the last laugh.

The joke's on us
Should we be angry that Goldman Sachs played the game by the rules that Treasury Secretary Tim Geithner and Federal Reserve Chairman Ben Bernanke wrote and then won big? As the banking bonus issue comes around again, we're venting our rage at Goldman for doing exactly what the government asked it to do, which was to accept the money it was shoveling its way and profit from it.

Admittedly, a lot of this "winning" is going on with the taxpayers' dime, but that isn't necessarily Goldman's fault. It was "too big to fail" that allowed the investment banking giant to exploit the system. At least some of our ire should go to the regulators who conceived the policy and the politicians who signed off on it. Goldman, JPMorgan Chase (NYSE:JPM), and Bank of America (NYSE:BAC) simply displayed masterful gamesmanship.

With more than 5,600 CAPS members weighing in on Goldman, investors have a lot to say about its skills. Mostly that it will continue to dominate, as suggested by more than 88% of them believing it will continue to outperform the market. CAPS member MoneyWorksforMe simply says about Goldman:

The best in the business. These guys bet against subprime while most were still drinking koolaid. Will continue to benefit immensely along with Morgan Stanley from increased M&A and less competition. Investors are still underestimating the earnings power of these two firms.

Reel to reel
Dynamic Materials hasn't enjoyed the same winning streak that Goldman Sachs has. Despite the weak economy, the specialist in explosive metalworking has managed to surprise Wall Street with earnings that beat expectations, sometimes resoundingly.

The announcement for the next quarter could do the same thing again. Although some of Dynamic Materials' main customers -- those in oil and gas, power generation, petrochemicals, and shipbuilding -- have been weakened by the recession, analysts are predicting that profits will be off 70% from the year-ago quarter. It looks like they're underestimating Dynamic Materials' cash-generating capabilities.

Not so, says CAPS member mmwmmr, who likes the company's ability to husband its resources and expects it to ride out the downturn.

Despite the lack of sales due to drop in demand, the company has managed its cash well, sustaining operating cash flows of $23,414 [million] for the nine months ending 9/30/09, versus $24,805 [million] for the nine months ending 9/30/2008, despite a net income of only $7,527 [million], versus $18,683, respectively. The company accomplished this mainly through a large reduction in accounts receivable, which is an indication of improved efficiency in cash collections.

While I will continue to hold my existing shares, I think I am going to put off purchasing any more shares until economic indicators show a pick up in production, or at the very least an increase in demand for oil (though that only makes up a minority of the company's business, which is currently operating at a loss). It's probably going to be a rough ride for a while, but if [Dynamic Materials] can wait out the global economic downturn, it may be poised to see some serious growth.

Yukking it up
The market's rally has changed from being mostly fueled by low-quality stocks to dragging most others along, based on lower year-over-year comparables. If you think there's some funny business afoot, let us know. Head over to Motley Fool CAPS and sound off.

Dynamic Materials is a Motley Fool Hidden Gems selection, and the Fool owns shares of Dynamic Materials. Try any of our Foolish newsletter services today, free for 30 days.

Fool contributor Rich Duprey does not have a financial position in any of the stocks mentioned in this article. You can see his holdings. The Motley Fool has a disclosure policy.