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Top 10 Companies That Beat Sales Forecasts

The following 10 companies exceeded analysts' sales forecasts by the widest margins in the second quarter.
Author:

BOSTON (

TheStreet

) -- Earnings season has been an indisputable success so far, with 76% of

S&P 500

TST Recommends

companies exceeding analysts' earnings estimates. Here are the 10 companies that beat by the widest margins. While stocks have been hit by economic uncertainty, these companies have demonstrated momentum. They are ordered by sales outperformance.

10.

HCP

(HCP) - Get Report

is a real estate investment trust focusing on health care properties. Second-quarter revenue rose 4% to $306 million, outpacing the consensus prediction by 15%. Net income fell 13% to $85 million, but earnings per share increased 23% to 27 cents. The gross and operating margins rose from 51% to 53%. HCP holds $136 million of cash and $5.4 billion of debt, translating to a debt-to-equity ratio of 0.9. HCP's stock sells for a forward earnings multiple of 30 and a book value multiple of 1.8, 45% and 24% discounts to industry averages. It pays a distribution yield of 5.5% with a payout ratio of 459%. Roughly 31% of analysts covering HCP rate its stock "buy."

9.

Harley-Davidson

(HOG) - Get Report

sells motorcycles. Second-quarter revenue inched up 3.9% to $1.3 billion, beating analysts' consensus by 16%. Net income more than tripled to $71 million and earnings per share quadrupled to 59 cents. The operating margin rose from 22% to 24%. Harley-Davidson has $1.8 billion of cash and $6.5 billion of debt, equaling a quick ratio of 1.6 and a debt-to-equity ratio of 3.1. The stock trades at a forward earnings multiple of 13, a 48% discount to its peer average. Its PEG ratio, a measure of value relative to predicted long-run growth, of 0.1 signals a 90% discount to fair value. Roughly 44% of analysts rate Harley's stock "buy."

8.

Ventas

(VTR) - Get Report

is a real estate investment trust with a portfolio of health care and senior housing facilities. Second-quarter revenue gained 5.4% to $244 million, exceeding researchers' consensus by 20%. Net income dropped 34% to $58 million, but earnings per share gained 10% to 33 cents. The gross and operating margins extended from 43% to 45%. The balance sheet stores $71 million of cash and $2.6 billion of debt, converting to a debt-to-equity ratio of 1.1. The company's stock sells for a forward earnings multiple of 32, a 43% discount to its peer average. It pays a distribution yield of 4.3% with a payout ratio of 161%. Just 27% of analysts rate Ventas a "buy."

7.

NiSource

(NI) - Get Report

is a utility, selling electricity and natural gas in the U.S. NiSource swung to a second-quarter profit of $28 million, or 10 cents a share, from a loss of $4.8 million, or 1 cent, a year earlier. Revenue declined 7.7% to $1.2 billion, still beating the consensus estimate by 21%. The operating margin stretched from 9.7% to 12%. NiSource has $220 million of cash and $6.9 billion of debt, equaling a debt-to-equity ratio of 1.4. NiSource's stock trades at a book value multiple of 1 and a sales multiple of 0.7, 47% and 39% discounts to utility industry averages. It pays a dividend yield of 5.5% with a payout ratio of 84%. Just 10% of analysts rate NiSource a "buy."

6.

BB&T Corp.

(BBT) - Get Report

is a regional bank. Second-quarter revenue increased 8.5% to $2.9 billion, 28% above researchers' expectation. Net income ascended 2.9% to $210 million, but earnings per share climbed 50% to 30 cents. The operating margin widened from 23% to 30%. BB&T holds $29 billion of debt, translating to a debt-to-equity ratio of 1.7. BB&T's stock sells for a forward earnings multiple of 11, a book value multiple of 1 and a cash flow multiple of 2.3, 21%, 20% and 59% discounts to peer averages. Of analysts covering BB&T, nine, or 25%, rate its stock "buy", 25 rate it "hold" and two rate it "sell." A median target of $30.45 implies a return of 32%.

5.

AES Corp.

(AES) - Get Report

is a global electric utility. Second-quarter revenue gained 22% to $4 billion, beating analysts' consensus by 31%. Profit tumbled 52% to $144 million, or 17 cents a share. The operating margin remained steady at 22%. AES has $5.2 billion of cash and $20 billion of debt, converting to a quick ratio of 1.2 and a debt-to-equity ratio of 2.9. The company's stock trades at a forward earnings multiple of 10 and a cash flow multiple of 2.9, 68% and 46% discounts to industry averages. Of firms evaluating AES, five, or 71%, advise purchasing its shares and two recommend holding them. A median target of $15.67 suggests 47% of upside lies ahead.

4.

E*Trade Financial

(ETFC) - Get Report

is an online brokerage. Second-quarter revenue fell 20% to $614 million, 32% above researchers' consensus. E*Trade swung to a profit of $35 million, or 12 cents a share, from a loss of $143 million, or $2.20, a year earlier. The operating margin turned positive. The balance sheet stores $4 billion of cash and $11 billion of debt, equaling a debt-to-equity ratio of 2.7. E*Trade's stock sells for a book value multiple of 0.8 and a sales multiple of 1.3, 51% and 45% discounts to peer averages. Of analysts covering E*Trade, six, or 35%, rate its stock "buy", 10 rate it "hold" and one rates it "sell." A median price target of $16.43 suggests a return of 18%.

3.

Prudential Financial

(PRU) - Get Report

is a diversified insurer. Second-quarter revenue soared 60% to $11 billion, exceeding the consensus estimate by 52%. Net income sextupled to $1.1 billion, but earnings per share climbed a more modest 42% to $1.70. The operating margin extended from 3.9% to 16%. Prudential has $50 billion of cash and $31 billion of debt, equaling a debt-to-equity ratio of 1. Prudential's stock trades at a forward earnings multiple of 8.5 and a cash flow multiple of 5.6, 22% and 37% discounts to insurance industry averages. Roughly 75% of researchers following Prudential rate its stock "buy." A median target of $70.50 implies 32% of upside.

2.

SLM Corp.

(SLM) - Get Report

is an education finance company. Second-quarter revenue stretched 13% to $1.7 billion, exceeding the consensus forecast by 52%. SLM swung to a profit of $338 million, or 63 cents a share, from a loss of $123 million, or 31 cents, a year earlier. The operating margin declined from 61% to 57%. SLM holds $199 billion of debt, converting to a debt-to-equity ratio of 39. SLM's stock sells for a forward earnings multiple of 8.1 and a book value multiple of 1.1, 33% and 50% discounts to peer averages. Of analysts covering SLM, seven, or 64%, rate its stock "buy" and four rate it "hold." A median target of $15.50 suggests a 35% return.

1.

Electronic Arts

(ERTS)

develops video and computer games. Fiscal first-quarter revenue expanded 27% to $815 million, beating analysts' expectation by 61%. Electronic Arts swung to a profit of $96 million, or 29 cents a share, from a loss of $234 million, or 72 cents, a year earlier. The operating margin turned positive. Electronic Arts has $1.7 billion of cash, equal to a quick ratio of 1.6, and no debt. The company's stock trades at a forward earnings multiple of 19 and a book value multiple of 2, 13% and 58% discounts to industry averages. Of researchers following Electronic Arts, 50% rate its stock "buy." A median target of $19.92 implies 24% of upside.

-- Reported by Jake Lynch in Boston.

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