As we move through earnings season, it will be the surprises that provide the best tell on which companies have the best earnings momentum. I track these closely -- and try to predict them using estimate changes. The table below shows the strongest upside surprises among companies that have reported so far in April.
Surprises often will cluster in an industry that has particular strength, but so far the upsides seem to be more company-specific. In the top five we see drug retail, office furniture, semiconductors, apparel, and medical devices! We can tease out some trends as both Hasbro (HAS) and Mattel (MAT) looked strong. The theme of fun/leisure is extended with the upsides from Six Flags (SIX) and Pool Corp (POOL).
Some upsides require caution. The coal company Peabody Energy (BTU) did better than expected but still posted a loss, and faces secular headwinds as power production shifts over to cheap natural gas. Yahoo (YHOO) posted good EPS but the revenue and outlook caused consternation among investors -- the jury is still out on a longer -- term turnaround there.
This list makes a good starting point for your research effort. The names at the top are certainly worthy of additional work.
On Wednesday, we'll look at the downside surprises, to assist in finding the names to avoid.