3 Earnings Season All-Stars - Investment Ideas


During earnings season, investors wait with bated breath to see which companies will "meet", "beat", or "miss" the consensus estimate. It is a high stakes game that can whip a stock's share price around if expectations aren't met.

Wouldn't it be great if you could just invest in companies that ALWAYS beat the earnings estimate?

It's not just wishful thinking. There actually are some companies that manage to achieve such a feat, at least over the last 5 years, even though market conditions haven't been easy during that time.

Over the last 5 years, companies have had to endure the worst economy since the Great Depression while managing earnings expectations. When the global economy was falling off a cliff at the end of 2008, it took a lot of management skill to successfully navigate those earnings seasons and come out with a beat quarter after quarter.

These three companies managed to do just that.

  1. Herbalife
  2. Kadant
  3. Wyndham Worldwide

Until last quarter, I could have added a fourth company, Apple. But it missed for the first time in over five years so its streak ended.

However, missing only one time in the last 5 years is also impressive given the depth of the financial crisis.

Here are a few companies that have managed to do that:

  1. Oil Services International ( OIS )
  2. Apple ( AAPL )
  3. Yum Brands ( YUM )

In addition to beating the estimate, Herbalife, Kadant and Wyndham are all seeing double digit earnings growth in 2011 and are expected to see further growth in 2012.

As we head into another earnings season, will these companies successfully keep their streaks intact for another quarter?

3 Earnings All-Stars

1. Herbalife Limited ( HLF )

Herbalife sells nutrition products such as protein shakes and snacks, fitness drinks, vitamins and other nutritional supplements through its army of 2.5 million independent distributors in 79 countries.

It is currently a Zacks #3 Rank (Hold) with a forward P/E of just 15.5.

2011 Expected Earnings Growth: 33.2%
2012 Expected Earnings Growth :9.5%

Herbalife is next scheduled to report earnings on Feb 21.

2. Kadant Inc. ( KAI )

Kadant makes fiber processing products. It supplies systems to the global pulp and paper industries through fluid handling which transfer fluids, steam or air between rotating cylinders and water-management equipment designed to clean fabrics.

Kadant is cheap, with a forward P/E of just 9.5. It is a Zacks #2 Rank (Buy) stock.

2011 Expected Earnings Growth: 50%
2012 Expected Earnings Growth: 13.3%

Kadant is scheduled to report earnings on Feb 22.

3. Wyndham Worldwide Corporation ( WYN )

Wyndham Worldwide is a hospitality company that operates 55 brands worldwide, including well-known hotel brands such as Wyndham Hotels and Resorts, Ramada, Days Inn, Super 8, and English Country Cottages.

This Zacks #3 Rank (Hold) has attractive valuations, with a forward P/E of just 13.6, well under its peers which average a P/E of 20.

2011 Expected Earnings Growth: 22.8%
2012 Expected Earnings Growth: 16.4%

Wyndham is scheduled to report its next earnings report on Feb 8.

While Apple proves that a "miss" can happen at any time, even to the best of them, I like the odds of a beat with any of these companies.

Tracey Ryniec is the Value Stock Strategist for Zacks.com . She is also the Editor of the Turnaround Trader and Insider Trader services. You can follow her on twitter at traceyryniec .

HERBALIFE LTD ( HLF ): Free Stock Analysis Report
KADANT INC ( KAI ): Free Stock Analysis Report
WYNDHAM WORLDWD (WYN): Free Stock Analysis Report
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Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Investing Ideas , Stocks

Referenced Stocks: AAPL , HLF , KAI , OIS , YUM



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