Earnings surprises normally have an immediate and a long-term positive impact on a company's stock price. In this article, I describe three high-yielding stocks that lately have beaten analyst expectations by a big margin. In my opinion, these stocks can reward an investor a capital gain along with a gratifying income. I recommend readers use this list of stocks as a basis for further research. All the data for this article were taken from Yahoo Finance, Portfolio123 and finviz.com, on November 04, before the market open.
Old Republic International Corporation (NYSE:ORI)
Old Republic International Corporation, through its subsidiaries, engages in underwriting insurance products primarily in the United States and Canada.
Old Republic International has a very low debt (total debt to equity is only 0.16), and it has a trailing P/E of 23.33 and a low forward P/E of 14.83. The price-to-sales ratio is very low at 0.81, and the price to free cash flow for the trailing 12 months is also very low at 8.68. The price to book value is at 1.20, and the average annual earnings growth estimates for the next five years is quite high at 10%. The forward annual dividend yield is high at 4.29%, and the payout ratio is at 85%.
The ORI stock price is 7.50% above its 20-day simple moving average, 11.80% above its 50-day simple moving average and 26.19% above its 200-day simple moving average. That indicates a short-term, a mid-term and a long-term uptrend.
Old Republic has recorded revenue, EPS and dividend growth, during the last year, the last three years and the last five years, as shown in the table below.
On October 24, Old Republic reported its third-quarter financial results. EPS came in at $0.34, a 240% above expectations. In the report, the company explained:
Consolidated operating results for this year's third quarter and first nine months were marked by improved underwriting performance in most of Old Republic's active and run-off operations. Year-over-year favorable comparisons were most pronounced in the combined MI and CCI run-off segment which evidenced a further drop in claim costs and a quarterly profit for the second consecutive quarter - the first such occurrence since Summer 2007. Title insurance earnings rose once again on the strength of strong revenue growth bound to relatively lower claim and operating expenses. Old Republic's largest business of general insurance posted moderately better performance in this year's third quarter and year-to-date periods as underwriting results benefited from higher premium revenues and lower operating costs.
Old Republic International has recorded revenue, EPS and dividend growth, and considering its good valuation metrics, its good earnings growth prospects, and the fact that the stock is in an uptrend, ORI stock can move higher. Furthermore, the very rich dividend represents a gratifying income.
Seaspan Corporation (NYSE:SSW)
Seaspan Corporation owns and operates the containerships primarily in Hong Kong. The company was incorporated in 2005 and is based in Majuro, Marshall Islands.
Seaspan Corporation has a very low trailing P/E of 9.15 and a forward P/E of 20.53. The price to free cash flow for the trailing 12 months is very low at 12.74, and the average annual earnings growth estimates for the next five years is at 7.60%. The forward annual dividend yield is very high at 5.44%, and the payout ratio is only 38.70%.
The SSW stock price is 5.10% above its 20-day simple moving average, 2.32% above its 50-day simple moving average and 9.71% above its 200-day simple moving average. That indicates a short-term, mid-term and long-term uptrend.
Seaspan Corporation has recorded strong EPS and revenue growth during the last five years, as shown in the table below.
The two charts below, which were taken from the company presentation, show the container industry trend, and the company's vision including its dividend policy.
On October 30, Seaspan Corporation reported its latest quarter financial results. EPS came in at $0.21, a 33% above expectations.
Summary of Key Highlights
- Achieved vessel utilization of 98.5% and 97.9% for the three and nine months ended September 30, 2013, respectively, or 99.5% if the impact of off-charter days is excluded.
- Paid quarterly dividends of $0.59375 and $0.496875 per Series C and Series D preferred share, respectively, representing a total distribution of $9.9 million. The dividends were paid to all Series C and Series D preferred shareholders of record as of July 29, 2013 for the period from April 30, 2013 to July 29, 2013.
- Paid a quarterly dividend for the second quarter of $0.3125 per Class A common share on August 21, 2013 to all shareholders of record as of August 12, 2013.
- Accepted delivery of one vessel during the quarter, bringing Seaspan's operating fleet to a total of 71 vessels at September 30, 2013.
Seaspan Corporation has recorded strong revenue and EPS growth, and considering its cheap valuation metrics and the fact that the stock is in an uptrend, SSW stock can move higher. Furthermore, the very rich dividend represents a gratifying income.
Risks to the expected capital gain and to the dividend payment include; a downturn in the world economy, a decline in freight rates, and the company's huge debt of $3.11 billion.
American National Bankshares Inc. (NASDAQ:AMNB)
American National Bankshares Inc. operates as the bank holding company for American National Bank and Trust Company that provides financial products and services to individuals and businesses in Virginia and North Carolina.
American National Bankshares has a very low debt (total debt to equity is 0.17), and it has a very low trailing P/E of 10.74 and a low forward P/E of 13.15. The price-to-cash ratio is very low at 2.27, and the average annual earnings growth estimates for the next five years is at 4%. The forward annual dividend yield is high at 4.08%, and the payout ratio is only 32.70%.
The AMNB stock price is 0.08% above its 20-day simple moving average, 0.23% above its 50-day simple moving average and 4.14% above its 200-day simple moving average. That indicates a short-term, a mid-term and a long-term uptrend.
American National Bankshares has recorded strong revenue and EPS growth during the last three years, as shown in the charts below.
American National Bankshares' margins and return on capital has been much better than that of the industry median, and the sector median, as shown in the tables below.
On October 17, American National Bankshares reported its third-quarter financial results, which beat EPS expectations by 15%. The company reported third quarter 2013 net income of $4,243,000 compared to $3,639,000 for the third quarter of 2012, a $604,000 or 16.6% increase. Diluted earnings per share were $0.54 for the 2013 quarter and $0.46 for the comparable 2012 quarter. This quarterly net income produced for 2013 a return on average assets of 1.30%, a return on average equity of 10.40%, and a return on average tangible equity of 14.90%.
American National Bankshares has recorded revenue and EPS growth, and considering its cheap valuation metrics and the fact that the stock is in an uptrend, AMNB stock still has room to go up. Furthermore, the rich dividend represents a nice income.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.