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Online Extra: Searching for a Nice Surprise


Companies that beat Wall Street analysts' estimates of their earnings even in just one quarter often have large stock-price gains in subsequent years. In part, that's because these companies have earnings momentum, and it takes investors awhile before they catch up with the profit power. We searched a database of 5,875 companies from FactSet Research System database looking only for American companies listed on the American Stock Exchange, New York Stock Exchange, and NASDAQ. We also screened out stocks with a market capitalization of less than $500 million to ensure that the stocks would have some liquidity. That narrowed the list to 1,975. Of those, 651 met expectations precisely -- so we dropped them, too.

Then we looked for companies that beat the analysts' consensus and calculated the earnings surprise as a percent of the company's share price. For example, Seacor Holdings, which owns and operates equipment used in the offshore oil, gas, and marine-transportation industries, earned $1.18 per share for the quarter ending June 30. Analysts forecasted 47 cents. The 71-cent earnings surprise was 1.1% of Secor's share price prior to its last earnings report (see column titled "Earnings Surprise").

This list of 171 companies focuses on the top 10% of earnings surprises as a percent of share price. Note: We have not vetted the list for companies with earnings surprises that are attributable to benefits that are unlikely to continue.

Company

NAICS Industry

Earnings Surprise/ Price*

Dividend Yield (%)

American Home Mortgage Investment Corp.

Real Estate Investment Trusts

1.1

5.7

AMR Corp.

Scheduled Air Transportation

1.2

0.0

Doral Financial Corp.

Other Nondepository Credit Intermediation

1.1

5.2

Downey Financial Corp.

Savings Institutions

1.0

0.6

GenCorp Inc.

Aerospace Product & Parts Manufacturing

1.3

0.0

Goldman Sachs Group Inc.

Investment Banking & Securities Dealing

1.0

0.8

Horace Mann Educators Corp.

Direct Insurance (except Life, Health, & Medical) Carriers

1.1

2.1

LaBranche & Co. Inc.

Securities Brokerage

1.2

0.0

Louisiana-Pacific Corp.

Veneer, Plywood, & Engineered Wood Product Manufacturing

1.2

1.8

Marathon Oil Corp.

Petro Refineries

1.1

1.9

Maxtor Corp.

Computer & Peripheral Equipment Manufacturing

1.3

0.0

NS Group Inc.

Iron & Steel Mills & Ferroalloy Manufacturing

1.0

0.0

Premcor Inc.

Petro Refineries

1.2

#N/A

RLI Corp.

Direct Insurance (except Life, Health, & Medical) Carriers

1.0

1.4

Ryerson Tull Inc.

Metal Service Centers & Other Metal Merchant Wholesalers

1.1

1.0

SEACOR Holdings Inc.

Deep Sea, Coastal, & Great Lakes Water Transportation

1.1

0.0

UICI

Direct Life, Health, & Medical Insurance Carriers

1.1

1.4

White Mountains Insurance Group Ltd.

Direct Insurance (except Life, Health, & Medical) Carriers

1.0

1.3

Xerium Technologies Inc.

Other Industrial Machinery Manufacturing

1.0

3.6

American Science & Engineering Inc.

Navigational, Meas, Electromedical, & Control Instruments Manufacturing

0.9

0.0

Avista Corp.

Electric Power Generation

0.8

2.9

Beazer Homes USA Inc.

Residential Building Construction

0.8

0.7

CNA Financial Corp.

Direct Insurance (except Life, Health, & Medical) Carriers

0.9

0.0

Covansys Corp.

Computer Systems Design & Related Services

0.8

0.0

Gateway Inc.

Computer & Peripheral Equipment Manufacturing

0.9

0.0

GATX Corp.

Construction, Transportation, Mining, & Forestry Machinery & Equipment Rental & Leasing

0.8

2.0

Goodyear Tire & Rubber Co.

Tire Manufacturing

0.8

0.0

MCI Inc.

Wired Telecommunications Carriers

0.9

6.3

Netflix Inc.

Video Tape & Disc Rental

0.8

0.0

Phoenix Cos. Inc.

Direct Life, Health, & Medical Insurance Carriers

0.8

1.3

Pinnacle Entertainment Inc.

Casinos (except Casino Hotels)

0.8

0.0

Rock-Tenn Co.

Paperboard Container Manufacturing

0.8

2.4

Sierra Pacific Resources

Electric Power Generation

0.8

0.0

Skechers USA Inc.

Footwear Manufacturing

0.9

0.0

Sonus Networks Inc.

Computer Systems Design & Related Services

1.0

0.0

Technical Olympic USA Inc.

Residential Building Construction

0.8

0.2

Terex Corp.

Construction Machinery Manufacturing

0.8

0.0

Zoran Corp.

Semiconductor & Other Electronic Component Manufacturing

1.0

0.0

Allegheny Technologies Inc.

Iron & Steel Mills & Ferroalloy Manufacturing

0.7

0.8

Beverly Enterprises Inc.

Nursing Care Facilities

0.7

0.0

Bluegreen Corp.

Other Activities Related to Real Estate

0.7

0.0

Checkpoint Systems Inc.

Other Communications Equipment Manufacturing

0.8

0.0

Cirrus Logic Inc.

Computer & Peripheral Equipment Manufacturing

0.7

0.0

Cleveland-Cliffs Inc.

Iron Ore Mining

0.8

0.9

First American Corp.

Direct Insurance (except Life, Health, & Medical) Carriers

0.7

1.6

Foundation Coal Holdings Inc.

Coal Mining

0.7

0.5

Greatbatch Inc.

Battery Manufacturing

0.8

0.0

Jones Lang LaSalle Inc.

Other Activities Related to Real Estate

0.7

1.1

Lehman Brothers Holdings Inc.

Investment Banking & Securities Dealing

0.7

0.7

Midland Co.

Direct Insurance (except Life, Health, & Medical) Carriers

0.8

0.7

National City Corp.

Commercial Banking

0.7

4.3

Reliance Steel & Aluminum Co.

Metal Service Centers & Other Metal Merchant Wholesalers

0.7

0.8

Sotheby's Holdings Inc.

All Other Support Services

0.7

0.0

Tellabs Inc.

Telephone Apparatus Manufacturing

0.7

0.0

Terra Industries Inc.

Fertilizer Manufacturing

0.7

0.0

UAP Holding Corp.

Farm Supplies Merchant Wholesalers

0.8

3.8

Walter Industries Inc.

@NA

0.7

0.3

Alliance Resource Partners L.P.

Coal Mining

0.6

3.6

Building Materials Holding Corp.

Lumber, Plywood, Millwork, & Wood Panel Merchant Wholesalers

0.6

0.6

CB Richard Ellis Group Inc.

@NA

0.6

0.0

CharterMac

Other Nondepository Credit Intermediation

0.6

7.5

CKE Restaurants Inc.

Limited-Service Eating Places

0.6

1.3

Clean Harbors Inc.

Waste Treatment & Disposal

0.6

0.0

Cummins Inc.

Engine, Turbine, & Power Transmission Equipment Manufacturing

0.6

1.4

EarthLink Inc.

Internet Service Providers & Web Search Portals

0.6

0.0

Electronic Data Systems Corp.

Computer Systems Design & Related Services

0.6

0.9

Lincoln National Corp.

Direct Life, Health, & Medical Insurance Carriers

0.6

2.8

MetLife Inc.

Direct Life, Health, & Medical Insurance Carriers

0.6

0.9

Overseas Shipholding Group Inc.

Deep Sea, Coastal, & Great Lakes Water Transportation

0.6

1.2

RealNetworks Inc.

Software Publishers

0.6

0.0

Spinnaker Exploration Co.

Oil & Gas Extraction

0.6

0.0

St. Paul Travelers Companies Inc.

Direct Insurance (except Life, Health, & Medical) Carriers

0.6

2.1

State Auto Financial Corp.

Direct Insurance (except Life, Health, & Medical) Carriers

0.6

1.1

Tetra Technologies Inc.

Support Activities for Mining

0.6

0.0

Timken Co.

All Other Fabricated Metal Product Manufacturing

0.6

2.1

WPS Resources Corp.

Electric Power Generation

0.6

3.9

Allmerica Financial Corp.

Direct Insurance (except Life, Health, & Medical) Carriers

0.5

0.0

American Electric Power Co. Inc.

@NA

0.5

3.6

AT&T Corp.

Wired Telecommunications Carriers

0.5

4.8

Champion Enterprises Inc.

All Other Wood Product Manufacturing

0.5

0.0

CommScope Inc.

Communication & Energy Wire & Cable Manufacturing

0.5

0.0

Crescent Real Estate Equities Co.

Real Estate Investment Trusts

0.5

7.5

Cymer Inc.

Other Industrial Machinery Manufacturing

0.5

0.0

El Paso Corp.

Pipeline Transportation of Natural Gas

0.5

1.2

First Bancorp Of Puerto Rico

Commercial Banking

0.5

1.7

Frontier Oil Corp.

Petro Refineries

0.5

0.4

Modine Manufacturing Co.

Other Motor Vehicle Parts Manufacturing

0.5

1.9

NovaStar Financial Inc.

Real Estate Investment Trusts

0.5

16.8

RF Micro Devices Inc.

Semiconductor & Other Electronic Component Manufacturing

0.5

0.0

ShopKo Stores Inc.

All Other General Merchandise Stores

0.5

0.0

Standard Pacific Corp.

Residential Building Construction

0.5

0.4

Vintage Petroleum Inc.

Oil & Gas Extraction

0.5

0.5

W-H Energy Services Inc.

Support Activities for Mining

0.5

0.0

World Wrestling Entertainment Inc.

Motion Picture & Video Production

0.5

3.7

Zenith National Insurance Corp.

Direct Insurance (except Life, Health, & Medical) Carriers

0.5

2.3

Advanced Micro Devices Inc.

Semiconductor & Other Electronic Component Manufacturing

0.5

0.0

Bristol-Myers Squibb Co.

Pharmaceutical & Medicine Manufacturing

0.5

4.6

CSG Systems International Inc.

Data Processing, Hosting, & Related Services

0.4

0.0

FBL Financial Group Inc.

Direct Life, Health, & Medical Insurance Carriers

0.4

1.4

Grant Prideco Inc.

Mining & Oil & Gas Field Machinery Manufacturing

0.4

0.0

Griffon Corp.

Ornamental & Architectural Metal Products Manufacturing

0.5

0.0

Halliburton Co.

Other Heavy & Civil Engineering Construction

0.4

0.7

Hansen Natural Corp.

Soft Drink & Ice Manufacturing

0.4

0.0

JLG Industries Inc.

Construction Machinery Manufacturing

0.4

0.1

Lone Star Technologies Inc.

Iron & Steel Pipe & Tube Manufacturing from Purchased Steel

0.5

0.0

MicroStrategy Inc.

Software Publishers

0.4

0.0

Ohio Casualty Corp.

Direct Insurance (except Life, Health, & Medical) Carriers

0.4

0.9

Oil States International Inc.

Mining & Oil & Gas Field Machinery Manufacturing

0.5

0.0

Plains All American Pipeline L.P.

Other Warehousing & Storage

0.4

6.1

Radian Group Inc.

Direct Insurance (except Life, Health, & Medical) Carriers

0.4

0.2

Reader's Digest Association Inc.

Book Publishers

0.5

2.6

Triarc Cos. Inc.

Lessors of Nonfinancial Intangible Assets (except Copyrighted Works)

0.5

2.4

TXU Corp.

@NA

0.4

2.1

WFS Financial Inc.

Other Nondepository Credit Intermediation

0.4

0.0

Administaff Inc.

Temporary Help Services

0.4

0.8

AON Corp.

Insurance Agencies & Brokerages

0.4

1.9

Casey's General Stores Inc.

Gasoline Stations with Convenience Stores

0.4

0.8

CIGNA Corp.

Direct Life, Health, & Medical Insurance Carriers

0.4

0.1

Compuware Corp.

Software Publishers

0.4

0.0

Dendrite International Inc.

Software Publishers

0.4

0.0

DIRECTV Group Inc.

Cable & Other Subscription Programming

0.4

0.0

Dril-Quip Inc.

Ship & Boat Building

0.4

0.0

Giant Industries Inc.

Petro Refineries

0.4

0.0

Headwaters Inc.

Other Petro & Coal Products Manufacturing

0.4

0.0

Intuitive Surgical Inc.

Navigational, Meas, Electromedical, & Control Instruments Manufacturing

0.4

0.0

Kerr-McGee Corp.

Oil & Gas Extraction

0.4

0.2

McDATA Corp.

Other Communications Equipment Manufacturing

0.4

0.0

Meritage Homes Corp.

Residential Building Construction

0.4

0.0

MTS Systems Corp.

Navigational, Meas, Electromedical, & Control Instruments Manufacturing

0.4

1.0

Schering-Plough Corp.

Pharmaceutical & Medicine Manufacturing

0.4

1.1

Sinclair Broadcast Group Inc.

Television Broadcasting

0.4

3.3

Telephone & Data Systems Inc.

Wireless Telecommunications Carriers (except Satellite)

0.4

0.9

Telewest Global Inc.

Wired Telecommunications Carriers

0.4

0.0

Alfa Corp.

Direct Insurance (except Life, Health, & Medical) Carriers

0.4

2.5

Atmos Energy Corp.

Natural Gas Distribution

0.4

4.3

Avocent Corp.

Computer & Peripheral Equipment Manufacturing

0.4

0.0

BMC Software Inc.

Software Publishers

0.4

0.0

Bois D' Arc Energy Inc.

Oil & Gas Extraction

0.4

0.0

Ceradyne Inc.

All Other Nonmetallic Mineral Product Manufacturing

0.4

0.0

Cincinnati Financial Corp.

Direct Insurance (except Life, Health, & Medical) Carriers

0.4

3.0

Coca-Cola Enterprises Inc.

Soft Drink & Ice Manufacturing

0.4

0.8

Dade Behring Holdings Inc.

Pharmaceutical & Medicine Manufacturing

0.4

0.2

Fidelity National Financial Inc.

Direct Insurance (except Life, Health, & Medical) Carriers

0.4

2.3

Gold Kist Inc.

Animal Slaughtering & Processing

0.4

0.0

Guess? Inc.

Family Clothing Stores

0.4

0.0

IndyMac Bancorp Inc.

Other Nondepository Credit Intermediation

0.4

4.0

MGIC Investment Corp.

Direct Insurance (except Life, Health, & Medical) Carriers

0.4

1.0

NVR Inc.

Residential Building Construction

0.4

0.0

Powerwave Technologies Inc.

Radio & Television Broadcasting & Wireless Communications Equipment Manufacturing

0.4

0.0

Ryland Group Inc.

Residential Building Construction

0.4

0.4

Simpson Manufacturing Co.

Hardware Manufacturing

0.4

0.5

Tyson Foods Inc.

Animal Slaughtering & Processing

0.4

0.9

AirTran Holdings Inc.

Scheduled Air Transportation

0.4

0.0

BankAtlantic Bancorp Inc.

Savings Institutions

0.3

0.9

Bear Stearns Cos.

Securities Brokerage

0.3

1.0

Capital One Financial Corp.

Credit Card Issuing

0.4

0.1

Cleco Corp.

Electric Power Generation

0.4

4.0

ConAgra Foods Inc.

Fruit & Vegetable Canning, Pickling, & Drying

0.4

4.7

ConocoPhillips

Petro Refineries

0.4

1.8

Lawson Software Inc.

Software Publishers

0.3

0.0

Pilgrim's Pride Corp.

Animal Slaughtering & Processing

0.3

0.2

R.H. Donnelley Corp.

Other Services Related to Advertising

0.4

0.0

R.R. Donnelley & Sons Co.

Printing

0.4

2.9

Saxon Capital Inc.

Real Estate Investment Trusts

0.4

19.2

South Jersey Industries Inc.

Natural Gas Distribution

0.4

2.9

StanCorp Financial Group Inc.

Direct Life, Health, & Medical Insurance Carriers

0.4

1.2

Stone Energy Corp.

Oil & Gas Extraction

0.3

0.0

Sunoco Inc.

Petro Refineries

0.4

1.0

Tesoro Corp.

Petro Refineries

0.4

0.3

TriZetto Group Inc.

Software Publishers

0.4

0.0

Ventiv Health Inc.

Drugs & Druggists' Sundries Merchant Wholesalers

0.3

0.0

Wabtec

Railroad Rolling Stock Manufacturing

0.3

0.2

* Expressed as percentage of share price

(This is an extended version of the table that appeared in the October 17, 2005, issue BusinessWeek, minus the information for the quarter ended June 30, 2005, and the quarter ended Sept. 30, 2005.)


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