The markets have been doing exceedingly well for some time, along with most of the stocks. The last quarter was a really admirable one. Europe is healing its wounds, and the States has solved its unemployment problem. Dividend stocks proved once again that they are great havens in uncertain times. As the global storm has passed, now it is time to seek bigger gains. I have found four stocks that have topped analyst estimates by nearly 30% minimum. I have analyzed these stocks further, taking their balance sheets and field performances into account. The O-Metrix Grading System is applied where possible, as well. Here are the four stocks that topped consensus profit estimates at grand percentages.
(Data obtained from Finviz/Morningstar, and current as of February 7. You can download the O-Metrix calculator here.)
Apple (AAPL)
Apple topped estimates by 36.8%, reporting a $13.87 EPS vs. $10.16. It is trading at a P/E ratio of 13.1, and a forward P/E ratio of 9.7. Analysts expect the company to have an 18.5% annualized EPS growth in the next five years. Profit margin (25.8%) doubles the industry average of 12.7%, and it offers no dividend.
Apple's revenue beat estimates by $7.5 billion, 73.2% higher than the year-ago quarter. Since the announcement of Q4 2011 results, the stock is up by 10.3%. Although iPod sales are down by 21% from the year-ago quarter, Apple had very significant increases in overall sales in the last quarter. Here is what the CEO Tim Cook said recently:
We're thrilled with our outstanding results and record-breaking sales of iPhones, iPads and Macs. Apple's momentum is incredibly strong, and we have some amazing new products in the pipeline.
(Read more about Apple's pipeline here.)
Although the stock is currently within overbought territory, it won't go down in the near term due to a successful quarterly report. iPad3 is expected to be released soon, so don't expect a significant pullback from the company. Besides, my new target price for Apple is $750 a share. Note that forward P/E ratio will lead to a 40% discount to Apple's five-year average. If Apple goes down the overbought territory, buy it. Apple has an A Grade O-Metrix score of 8.11.
Goldman Sachs (GS)
Goldman Sachs beat estimates by 48.3%, announcing $1.84 earnings per share. The stock shows a trailing P/E ratio of 11.6, and a forward P/E ratio of 9.1. Estimated annualized EPS growth for the next five years is 11.6%. It offers a 1.19% dividend, while the profit margin is 12.0%, crushing the industry average of 5.2%.
Goldman Sachs has been doing quite well since it multiple bottomed, as I predicted. Parallel to markets, the stock has been outperforming since the beginning of 2012. With the better-than expected unemployment report, financials are experiencing another push. Balance sheet might be a little weak, but the stock is rising. I don't see much downside risk for some time. The stock will have a 40% discount to its average, as well. Goldman Sachs has an O-Metrix score of 6.17.
Delta Air Lines (DAL)
Delta beat estimates the least of those in my list, reporting a $0.45 EPS vs. $0.35. The airliner is selling 21 times earnings, and only 4 times forward earnings. Five-year annualized EPS growth forecast is 15.8%. Profit margin (1.3%) is lower than the industry average of 1.7%, and it has no dividend policy.
Airlines are experiencing major problems due to fuel prices. Just days ago, Hungarian national airline was taken under bankruptcy protection. However, Delta -- like other stocks-- is enjoying the economic recovery. Delta Airlines stopped dropping its earnings-per share since January 2009, which came from -19.08 to 0.53. I like return-on equity of this stock, which is 46.2%, crushing the industry average of 9.6%. I believe Delta will reserve its momentum for some time. The stock has a C Grade O-Metrix score of 6.22.
Texas Instruments (TXN)
Texas topped estimates by 43.5% this quarter. It is trading at a P/E ratio of 13.9, and a forward P/E ratio of 13.7. Analysts estimate a 6.5% annual EPS growth for the next five years. It sports a 2.0% dividend, and the profit margin is 20.8%.
Since August 2011, the stock has been doing significantly well, seeing strong assets and cash flow performance. While Texas Instruments was a disappointment in 2011, the new year gave a push to the company. The stock has already come next to its 52-week high. There seems to be strong resistance upwards, but the company is fighting its way up. There's still upside potential if you ask me. Based on these numbers, Texas Instruments has an O-Metrix score of 3.07.
Disclosure: I am long AAPL.
