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Earnings season is well under way, and next week over 500 companies are reporting their latest quarterly earnings. Do you have a watch-list prepared? For a closer look at next week's roster, we ran a screen.

We began by screening next week's reporting companies for those with positive market sentiment, outperforming the market with performance above 20% for the last quarter.

We then screened for those stocks that still appear undervalued relative to the Graham Number. The Graham Number is a measure of maximum fair value created by the "godfather of value investing" Benjamin Graham.

It is based off of a stock's EPS and book value per share (BVPS).

Graham Number = SQRT(22.5 x TTM EPS x MRQ BVPS)

The equation assumes that P/E should not be higher than 15 and P/BV should not be higher than 1.5. Stocks trading well below their Graham Number may be undervalued.

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


We also created a price-weighted index of the stocks mentioned below, and monitored the performance of the list relative to the S&P 500 index over the last month. To access a complete analysis of this list's recent performance, click here.

Do you think these stocks will surprise the market with strong earnings reports next week? Use this list as a starting point for your own analysis.

List sorted by potential upside implied by the Graham Number.

1. Hawaiian Telcom Holdco, Inc. (NASDAQ:HCOM): Provides various telecommunication services to business and residential customers in Hawaii. Market cap at $206.13M, most recent closing price at $20.14. Earnings to be released on 05/10. Performance over the last quarter at 49.03%. Diluted TTM earnings per share at 2.41, and a MRQ book value per share value at 13.37, implies a Graham Number fair value = sqrt(22.5*2.41*13.37) = $26.93. Based on the stock's price at $20.13, this implies a potential upside of 33.76% from current levels.

2. Fortegra Financial Corporation (NYSE:FRF): Provides distribution and administration services, and insurance-related products to insurance companies, insurance brokers and agents, and other financial services companies in the United States. Market cap at $165.47M, most recent closing price at $8.30. Earnings to be released on 05/10. Performance over the last quarter at 22.78%. Diluted TTM earnings per share at 0.68, and a MRQ book value per share value at 6.57, implies a Graham Number fair value = sqrt(22.5*0.68*6.57) = $10.03. Based on the stock's price at $8.29, this implies a potential upside of 20.94% from current levels.

3. SeaCube Container Leasing Ltd. (NYSE:BOX-OLD): Operates as a container leasing company worldwide. Market cap at $368.06M, most recent closing price at $18.19. Earnings to be released on 05/07. Performance over the last quarter at 24.08%. Diluted TTM earnings per share at 1.96, and a MRQ book value per share value at 10.87, implies a Graham Number fair value = sqrt(22.5*1.96*10.87) = $21.89. Based on the stock's price at $18.14, this implies a potential upside of 20.7% from current levels.

*BVPS and EPS data sourced from Yahoo! Finance, all other data sourced from Finviz.

Source: 3 Outperforming And Undervalued Stocks Reporting Quarterly Earnings Next Week