During the week of April, 190 companies in the S&P 500 or 40% of the S&P 500 reported their earnings. In all things Wall Street there is opportunity with all the reporting, if a earnings of a company surprises the analyst’s then the stock will go up or down depending on the surprise. To this end, companies such as Thomson Reuters have developed a tool called SmartEstimate. The tool assigns a different weight to every analyst based on how accurate they have been in the past – were some analyst surprised all the time or were they near perfect? Hugh Smith of Thomson Reuters used SmartEstimate criteria to”

companies yet to report but the SmartEstimate is greater than 2% or 80% chance the reported figure will indeed beat the estimate.

the expected earnings growth based of SmartEstimate is 15.9%, companies in the list should be more

Wall Street has many analysts and they are all doing similar things, if a company 4 week price change is greater than 10%, much of the surprise would be price in, the idea is to look for companies where it is not priced in

Company                      Reporting    EPS          Q1 YOY    Rev      Q1          4 week     Dividend

Date               Predict    Smartest   Pred   SmarEs  Price       Yield %

Surprise  EPS Grow  Surpr Rev Grow Change

Mosaic                         May 2              6.4%            46%        0.36%    5%         -7.2%       4.06

NVIDIA                        May 9               2.0              114           0.12      52           -5.4          0.54

EOG Resource            May 8              11.7             121           0.44       87          -1.3           0.71

XL Group                    Apr 26                3.6              40            0.05       17            1.5           2.15

Devon Energy            May 2                3.1              184           1.04       52            2.4           0.60

Equinix  Inc               Apr 26               2.7             293            0.05       18            3.5           1.98

Cabot Oil & Gas          Apr 28               4.7             240             3.8        81            3.9            0.34

American Tower        Apr 27               5.1               26              0.22     32            4.3            2.0

Amazon.com               Apr 27               3.9               17             0.04      30            6.3            0.0

Linking to dividend paying stocks, if you are going to use this type of analysis you have to think how will the street react? There should be many people doing the exact same thing and remember the old Holiday Inn ad the No surprise Rooms. Not only does the company have to have a bigger than expected surprise (ideally one way or another) the street has to agree with your decision to buy or not to buy. It does happen see Caterpillar but it does not happen often. An easier decision maybe to buy quality companies making profits and hold them as long as they do not offer surprises.

There are more questions than answers, till the next time – to raising questions.