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MARKET SAVVY : Savvy Confidential: A Briefing for Investors

Some Stocks Beat Forecasts, Take Beating

July 16, 1999|JOSH FRIEDMAN

With earnings season in full swing, The Times asked number cruncher LIMresearch.com of Austin, Texas, to look at data from the previous six quarters in an effort to spot trends of interest to investors.

According to Cooper Vertz, senior analyst at LIMresearch, companies that have beaten analysts' expectations each time include BMC Software (ticker symbol: BMCS), Compuware (CPWR), EG&G Inc. (EGG), B.F. Goodrich (GR), Ingersoll Rand (IR), Lucent (LU), Lexmark (LXK), Qualcomm (QCOM), Siebel Systems (SEBL), Infoseek (SEEK), Tyco International (TYC), United Technologies (UTX), VF Corp. (VFC) and USX (X).

Sonat Inc. (SNT), however, has fared worse than expected in five of the last six quarters.

LIMresearch.com, which compared reported figures to the consensus estimates compiled by earnings tracker IBES Inc., only included Standard & Poor's 500 index members in its study.

Analyzing the movements of the stocks with distinctive earnings patterns, Vertz found:

* BMC Software (expected to report per-share earnings of 40 cents next Friday) shares rose five of the six times the day after the earnings report. But the gain was usually short-lived. Four times, the stock was lower a week later.

* Goodrich (87 cents, Wednesday) has been a consistent performer, even after the good news is out. The exception occurred in July 1998, when the overall market was reeling. The other five times, Goodrich shares have rallied an average of 8% in the month after the earnings report.

* Qualcomm (58 cents, Tuesday), whose earnings have thrashed projections by an average of 20%, has seen its shares slide the following week each time. Last January and July, the stock skidded 19% and 14%, respectively, in the month after its earnings report. "Since Qualcomm's latest earnings-per-share estimates are for a 40% increase over last quarter--and the stock has rallied about 70% in the last three months--it's scary to think what might happen if they don't meet expectations," Vertz said.

* Although Infoseek (loss of 42 cents, Tuesday) has beaten the consensus every quarter, each report has "still been a whopping loss." The stock has had mixed post-earnings results.

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