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The big winners of earnings season

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One of the open secrets of earnings season is that companies are supposed to beat the estimates that professional analysts provide for their income. Going back to 1994, 62 percent of all S&P 500 companies exceed Wall Street’s estimates of their quarterly earnings.

So it’s not news when a company beats the analysts’ estimates. That’s to be expected. What is news is when a stock beats the estimates so soundly that the share price jumps. That’s the real achievement of earnings season.

See also: 6 market predictions for 2013

Less than half of the companies in the S&P 500 have reported earnings so far this season, but there have been some significant beats for some erstwhile downtrodden stocks. Here are some of the biggest winners so far.


It’s not news that IBM beat its earnings estimate; it’s now done so for an astonishing 40 straight quarters. And the beat wasn’t so big this quarter: On January 22, IBM reported earnings of $5.39 per share, as opposed to the Wall Street estimate of $5.25. More significantly, it reported that income was up 6 percent for the quarter. That was enough to push IBM up 4.5 percent in after-hours trading, and make it the best-performing component in the Dow Jones Industrial Average for the week. All this was close on the heels of IBM falling by 9 percent in the fourth quarter of 2012.

Image: Watson, powered by IBM POWER7, is a work-load optimized system that can answer questions posed in natural language over a nearly unlimited range of knowledge.(AP Photo/IBM Corporation)


Halliburton showed that even a decrease in earnings doesn’t have to be a bad thing, as long as it still exceeds the analysts’ estimates. Halliburton’s earnings per share were 98 cents back in the fourth quarter of 2011, but a year later, that had fallen all the way to 72 cents per share. But the Street had been even more pessimistic, with a consensus estimate of 61 cents per share. That added up to an earnings beat of 18 percent, enough to push the stock up by over 5 percent on earnings day.

Image: In this April 15, 2009 file photo, the Halliburton sign adorns the side of a machine being used by the company at a site for natural-gas producer Williams in Rulison, Colo. (AP Photo/David Zalubowski)


Unisys was a similar story. The information technology giant was down somewhat on a year-over-year basis, slipping from $1.94 per share in 2011 to $1.67 per share last year. But Wall Street was expecting a total wipeout: The consensus estimate, according to Zacks Investment Research, was a measly one dollar per share. One wonders how the Street could have botched this so badly, expecting the earnings to fall by nearly half, when they really dropped by just 14 percent. The stock bounced up by nearly 15 percent on the news.

A sign outisde the Unisys Corp. is seen Tuesday, Oct. 18, 2005, in Blue Bell, Pa. (AP Photo/Rusty Kennedy)


On the other side of things, Procter & Gamble was expected to improve over its previous earnings: As compiled by FactSet, the analysts’ consensus was that P&G would earn $1.11 per share, up from 57 cents per share in the same quarter a year earlier. But the maker of Tide and Crest blew past both those marks, more than doubling its net income in recording earnings of $1.39 per share. The stock popped up 4 percent on the news last Friday and has kept drifting upward ever since.

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Image: In this Aug. 2, 2010 photo, the Procter & Gamble Co. headquarters building is shown in Cincinnati. (AP Photo/Al Behrman)

AMDAdvanced Micro Devices found itself in the unlikely position of posting a loss but still far exceeding expectations. After adjusting for some one-time charges, AMD reported a loss of 14 cents per share, but the Street had expected a loss of 21 cents – which means the stock popped 10 percent on news that the company had lost money.

Image: This July 13, 2010 photo shows an entrance to the Advanced Micro Devices Inc. (AMD) headquarters in Sunnyvale, Calif. (AP Photo/Paul Sakuma)


Yahoo looked like a winner briefly, when its earnings came in at 32 cents per share rather than the consensus estimate of 28 cents per share. It got a short-lived boost in after-hours trading, popping 5 percent, but once investors realized that Yahoo’s first-quarter guidance numbers were actually lower than the analysts had expected, the stock gave back all those gains.

Image: This Oct. 17, 2012 photo shows a sign in front of Yahoo! headquarters in Sunnyvale, Calif. (AP Photo/Marcio Jose Sanchez)


But the biggest winner of them all for this earnings season has to be Netflix. Its stock has been down in the dumps for a long time, ever since the one-two self-inflicted punch of raising rental rates and splitting its DVD and streaming businesses into two separate companies (remember Qwikster?) in the summer of 2011. Between July and November of that year, the stock lost 80 percent of its value. It’s been struggling to rebound ever since, until this quarter’s earnings report caught the Street by surprise. The analyst consensus was for the video giant to lose 12 cents per share; instead it earned 13 cents a share. It also announced 2 million new U.S. subscribers to its streaming service, and 1.8 million more outside the U.S. The share price jumped 42 percent in one day, and 73 percent over the course of three days. 

Image: In this Oct. 10, 2011 photo, the exterior of Netflix headquarters is seen in Los Gatos, Calif. (AP Photo/Paul Sakuma)

For more from Tom Nawrocki, see:

The trouble with buybacks

Inside the Dell buyout

The coming return to equity funds