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Do you like to follow earnings season to try and find stocks that may announce an earnings surprise? For a look at interesting companies reporting next week, we ran a screen.

We began with stocks reporting their first-quarter earnings next week for those that appear undervalued relative to earnings growth, with PEG below 1.

We then screened these names for those with strong profitability as indicated by DuPont analysis. DuPont breaks down return on equity (ROE) profitability into three sources:

ROE

= (Net Profit/Equity)

= (Net profit/Sales)*(Sales/Assets)*(Assets/Equity)

= (Net Profit margin)*(Asset turnover)*(Leverage ratio)

Because increases in net margin and asset turnover are considered positive things, DuPont focuses on companies with these characteristics: Increasing ROE along with,

  • Decreasing leverage, (i.e. decreasing Asset/Equity ratio)
  • Improving asset use efficiency (i.e. increasing Sales/Assets ratio) and improving net profit margin (i.e. increasing Net Income/Sales ratio)

Those companies that pass DuPont are seeing positive trends in the sources of their increasing profitability, which adds further weight to the idea that the names are profitable.

Interactive Chart: Press Play to compare changes in market cap over the last two years for the top six stocks mentioned below. Analyst ratings sourced from Zacks Investment Research.

Do you think these stocks will continue to see strong profitability and announce a positive earnings surprise? Use this list as a starting point for your own analysis.

List sorted by PEG.

1. WABCO Holdings Inc. (WBC): Develops, manufactures, and sells braking, stability, suspension, and transmission control systems primarily for commercial vehicles. Market cap at $3.79B. Price at $59.00. PEG at 0.71. Earnings to be released on 04/26. MRQ net profit margin at 10.39% vs. 10.3% y/y. MRQ sales/assets at 0.414 vs. 0.411 y/y. MRQ assets/equity at 2.764 vs. 3.699 y/y.

2. Questcor Pharmaceuticals, Inc. (QCOR): Provides prescription drugs for central nervous system and inflammatory disorders. Market cap at $2.58B. Price at $41.30. PEG at 0.82. Earnings to be released on 04/24. MRQ net profit margin at 41.89% vs. 21.91% y/y. MRQ sales/assets at 0.274 vs. 0.193 y/y. MRQ assets/equity at 1.255 vs. 1.265 y/y.

3. Symetra Financial Corporation (SYA): Operates as a financial services company in the life insurance industry in the United States. Market cap at $1.35B. Price at $11.20. PEG at 0.82. Earnings to be released on 04/25. MRQ net profit margin at 13.21% vs. 12.56% y/y. MRQ sales/assets at 0.02 vs. 0.019 y/y. MRQ assets/equity at 9.002 vs. 10.769 y/y.

4. Occidental Petroleum Corporation (OXY): Operates as an oil and gas exploration and production company primarily in the United States. Market cap at $71.95B. Price at $88.08. PEG at 0.87. Earnings to be released on 04/26. MRQ net profit margin at 26.98% vs. 23.83% y/y. MRQ sales/assets at 0.101 vs. 0.097 y/y. MRQ assets/equity at 1.596 vs. 1.614 y/y.

5. Kennametal Inc. (KMT): Manufactures and supplies tooling, engineered components, and advanced materials consumed in production processes worldwide. Market cap at $3.57B. Price at $44.52. PEG at 0.88. Earnings to be released on 04/26. MRQ net profit margin at 11.48% vs. 7.68% y/y. MRQ sales/assets at 0.243 vs. 0.236 y/y. MRQ assets/equity at 1.642 vs. 1.646 y/y.

6. Timken Co. (TKR): Develops, manufactures, markets, and sells anti-friction bearings and related products and steel products primarily in the United States and Europe. Market cap at $4.96B. Price at $50.36. PEG at 0.88. Earnings to be released on 04/25. MRQ net profit margin at 8.63% vs. 8.43% y/y. MRQ sales/assets at 0.291 vs. 0.256 y/y. MRQ assets/equity at 2.146 vs. 2.172 y/y.

7. Apple Inc. (AAPL): Designs, manufactures, and markets personal computers, mobile communication and media devices, and portable digital music players, as well as sells related software, services, peripherals, networking solutions, and third-party digital content and applications worldwide. Market cap at $568.47B. Price at $611.35. PEG at 0.9. Earnings to be released on 04/24. MRQ net profit margin at 28.2% vs. 22.45% y/y. MRQ sales/assets at 0.334 vs. 0.308 y/y. MRQ assets/equity at 1.54 vs. 1.587 y/y.

8. BE Aerospace Inc. (BEAV): Engages in the design, manufacture, sale, and service of commercial aircraft and business jet cabin interior products worldwide. Market cap at $4.60B. Price at $44.25. PEG at 0.92. Earnings to be released on 04/23. MRQ net profit margin at 8.75% vs. 5.76% y/y. MRQ sales/assets at 0.171 vs. 0.159 y/y. MRQ assets/equity at 2.049 vs. 2.131 y/y.

9. Celanese Corp. (CE): Manufactures and sells chemical products worldwide. Market cap at $7.52B. Price at $47.11. PEG at 0.94. Earnings to be released on 04/24. MRQ net profit margin at 5.89% vs. 3.85% y/y. MRQ sales/assets at 0.189 vs. 0.182 y/y. MRQ assets/equity at 6.352 vs. 8.943 y/y.

10. Dice Holdings, Inc. (DHX): Provides online recruiting and career development services. Market cap at $616.74M. Price at $9.52. PEG at 1. Earnings to be released on 04/25. MRQ net profit margin at 22.09% vs. 15.15% y/y. MRQ sales/assets at 0.145 vs. 0.119 y/y. MRQ assets/equity at 1.56 vs. 1.788 y/y.

*Accounting data sourced from Google Finance, all other data sourced from Finviz.

Source: 10 Highly Profitable And Undervalued Stocks Reporting Earnings Next Week