(By Rich Bieglmeier) With earnings season slowing down, companies that beat Wall Street's estimates receive greater recognition than usual due to less competition. Every week, iStock identifies the names with an iEstimate that's greater than the street consensus.
From our potential upside surprise list, a trip down history lane helps us pinpoint stocks that tend to pop around the news. Earnings results are, after all, the four most anticipated news announcements a year for publicly traded companies.
Any investor that's been in the market long enough has felt the glory of being on the right side of a post-earnings move, and the pain of the wrong side. Although psychologists say the avoidance of pain is a greater fear than the motivation to seek pleasure, today we have two companies that could stimulate your profit motive next week.
Eagle Materials Inc. (EXP) reports it fourth quarter before the market opens on Wednesday, May 16, 2012. More than 80% of materials companies have exceeded Wall Street's forecasts during this earnings season.
Our iEstimate of 27 cents suggests the producer of building materials and construction products will bypass the 23 cent forecast. In a good sign, the two most recent moves by analysts were upward revisions, and five of the last six materials companies have topped the street view by at least 32%.
EXP's stock price has reacted favorably for shareholders in six of the last eight bullish surprises. The average move in the days surrounding the bullish beats is 4.5%, with a max 19.7% and minimum of 0.6%.
Eagle Materials is currently trading on support at its 12-day moving average of $36.51. A muscular result and an upbeat outlook from management, and EXP shares should challenge the 52-week high of $37.28. From there, the next bout of resistance comes into play after $40.
Arctic Cat Inc's (ACAT) earnings could be hot. Wall Street sees a loss of 56 cents for its fourth quarter. The recreational vehicles maker will do 14% better than anticipated according to the iEstimate of a 48 cent loss, an 8% upside surprise.
Artic has typically iced the Street number as the company has been on the plus side of the consensus 15 of the last 16 quarters. Four of the last six quarters, ACAT has raced by projections seven quarters in a row with the stock price zooming by at least 19% in four. Post-eps gains have been had by investors in six of the last eight profit checkups.
The price has fallen seven times the last four years of earnings announcements. The good news for traders, however, is that up or down, shares move more than 15% a majority of the time. ACAT could be an excellent candidate for an options straddle.
The stock chart shows Arctic Cat shares are under pressure as the 12-day moving average has moved below the 26-day, while the price has dipped from $47 and change to the low $40s. Double support is just below at $40 and good news before the market opens next Tuesday should help shares regain lost ground.