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 Diamond Foods, Inc. (NASDAQ:DMND). Analysts were expecting the snack distributor to post a steep loss of $0.17 a share. Diamond Foods, Inc. (NASDAQ:DMND) surprised the pros by generating an actual profit of $0.05 a share.
Revenue may have taken an 11% hit, but that too was well ahead of expectations. The company behind Pop Secret microwaveable popcorn, Kettle Chips potato chips, and its namesake nuts has struggled to find firm footing with Wall Street since being rocked by an accounting scandal. The embarrassing ordeal found the company losing its CEO and CFO as well as a pending acquisition of the Pringles potato-chip line.
Diamond Foods, Inc. (NASDAQ:DMND) moved closer to leaving its past behind by naming a new CFO last week, and surpassing expectations on the bottom line is another good way to make that happen.
Shares of PVH Corp (NYSE:PVH) climbed better than 8% after the branded apparel giant behind Tommy Hilfiger and Calvin Klein dressed up a blowout quarterly report.
Adjusted earnings at the company that used to be called Phillips-Van Heusen soared 34% to $1.91 a share. Wall Street was braced for flat earnings growth, and it’s hard to blame them. PVH’s own guidance was calling for profitability to clock in at just $1.31 a share.
Surprisingly — and not in a good way — PVH Corp (NYSE:PVH) actually stuck to its earlier guidance calling for a profit of $7 a share for the entire fiscal year ending in January. When a company delivers a blowout quarter like PVH Corp (NYSE:PVH) just did, investors like to see the corporate outlook rise accordingly. It leaves the market wondering if the balance of the year will be weaker than originally projected. Clearly, the 8% pop in the stock last week proves that investors aren’t overly concerned with that development, but it is something that bears watching.