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Investors Business Daily
Investors Business Daily

11 Companies Just Demolished Analysts' Profit Forecasts

Looking for reasons to celebrate during the otherwise disappointing fourth-quarter profit season? A few standout S&P 500 companies just gave you some big ones.

Eleven companies in the S&P 500, including Corteva, Lamb Weston and T-Mobile US, blew away analysts' fourth-quarter profit forecasts by 30% or more, says an Investor's Business Daily analysis of data from S&P Global Market Intelligence and MarketSmith.

Such massive positive surprises are a big win in this reporting season — now halfway over — which has mostly been a bust. Shares of the 11 companies to trounce earnings forecasts are up an average 13.2% this year — topping the S&P 500's 7.7% rise.

"At the midpoint of the fourth-quarter earnings season, the performance of S&P 500 companies continues to be subpar," says John Butters, analyst at FactSet. "While the percentage of S&P 500 companies reporting positive earnings surprises remained flat over the past week, the magnitude of these earnings surprises decreased during this time, mainly due to negative EPS surprises reported by a number of large technology companies."

Where Are The Big S&P 500 Surprises

S&P 500 companies normally top earnings estimates each quarter. But the problem in the fourth quarter is that they're beating by a disappointingly small amount.

So far, S&P 500 companies only topped earnings estimates by a tiny 0.6%, Butters says. That's well below the 8.6% companies beat earnings by on average over the past five years.

"If 0.6% is the actual surprise percentage for the quarter, it will mark the lowest surprise percentage reported by the index since 2008," Butters said.

And disappointing surprises go a far way to explain why S&P 500 companies' profits are down 5.3% from the same period a year ago. "If  5.3% is the actual decline for the quarter, it will mark the first time the index has reported a year-over-year decrease in earnings since the third quarter of 2020," he said.

So which S&P 500 companies are bucking the trend and blowing out the numbers?

S&P 500 Companies Crushing The Estimates

Seed and herbicide company Corteva is the banner performer in the S&P 500 for the fourth quarter. The company reported an adjusted profit of 16 cents a share, topping analysts' forecasts by more than 150%.

Amazingly the company's shares are only up 4.6% this year to 61.49, even after the remarkable profit beat reported on Feb. 1. And the company's 100% growth over the same year-ago period wasn't a complete fluke either. Analysts think Corteva's bottom line will rise another nearly 7.5% in 2023 and 20.6% in 2024.

Looking for some potatoes to go with your $7 a dozen eggs for breakfast? Such pent-up demand explains why Lamb Weston, a processor of frozen potatoes, on Dec. 16 reported profit of $1.28 a share, outstripping estimates by more than 72%.

Shares of the company are up 10% this year to 98.31, as investors brace for even more growth. The company's bottom line is seen growing as far as the eye can see, including 24% this fiscal year, 16% in 2024 and 3% in 2025.

T-Mobile US Does It Again

Analysts, again, were caught flat-footed by T-Mobile US' stellar results reported on Feb. 1. The wireless carrier reported an adjusted fourth-quarter profit of $1.59 a share, trouncing views by nearly 50%. The shares of one of Warren Buffett's favorite stocks are up more than 3% this year.

T-Mobile US, though, has made topping earnings forecasts into a routine event. T-Mobile US beat earnings views for every quarter since the first quarter of 2016.

Make no mistake, this fourth quarter's earnings season gave S&P 500 investors plenty reason to despair. But that didn't stop a small group of companies from finding a way to outperform.

Top S&P 500 Fourth-Quarter Earnings Surprises

Company Ticker Fourth-quarter earnings surprise Sector
Corteva 153.2% Materials
Lamb Weston Holdings 72.4 Consumer Staples
T-Mobile US 49.7 Communication Services
Clorox 49.4 Consumer Staples
Match Group 43.0 Communication Services
Seagate Technology 38.3 Information Technology
Weyerhaeuser 36.5 Real Estate
Camden Property 35.6 Real Estate
NVR 34.9 Consumer Discretionary
Wells Fargo 32.6 Financials
Rockwell Automation 31.5 Industrials
Sources: IBD, S&P Global Market Intelligence
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