Stocks: Six Upside Earnings Surprises

S&P finds a half-dozen names that beat June-quarter earnings forecasts by a wide marginand carry top ranking from its analysts

More than half of the companies in the Standard & Poor's 500-stock index had reported June-quarter profits by July 29, and it now appears the S&P 500 will post a 19% year-over-year decline for the quarter vs. the week-earlier estimate of a 10% drop, according to calculations by S&P's Sam Stovall, chief investment strategist, and Steve Biggar, managing director of global equity research. "Most of the blame goes to the financial sector, which is now projected to record a 90% decline in results vs. the week-earlier estimate of a 60% drop," says Stovall.

Of the 270 companies that had reported as of July 29, 19 beat end-of-quarter estimates by more than 25%, while 133 beat estimates by between 2% and 25%. In addition, 47 companies missed by between 2% and 25%, while 19 missed by more than 25%.

This week, we wanted to focus on the names that posted the biggest upside surprises. To enhance the attractiveness of the names on the list, we applied an additional filter: The stocks had to carry S&P's highest investment rankings of 4 STARS (buy) or 5 STARS (strong buy), indicating S&P equity analysts expect the stocks to outperform the broader market on a total return basis over the coming 12 months and rise in price on an absolute basis.

The list contains some surprises of its own, since three of the six are from the financial-services sector.

Company Ticker S&P STARS Rank
Best Buy BBY 5
Goldman Sachs Group GS 4
JPMorgan Chase JPM 5
National Semiconductor NSM 4
Northern Trust NTRS 4
Sherwin-Williams SHW 4
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