Five Stocks Meeting Expectations

By Will Ashworth | March 03, 2009 AAA

"Beat expectations" is a phrase investors love to hear, especially at times like these when there's very little good news emerging from the business media. Although it's often ignored in favor of sexier growth stories, I think it's about time that companies meeting expectations got the appreciation they deserve. So, in celebration of its coming out party, here are five stocks that met expectations in the past week.

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Steven Madden
Shoemaker Steven Madden reported its fourth quarter on February 24, and its earnings per share (EPS) came in at 40 cents, exactly what analysts were expecting. In addition to meeting earnings estimates, revenues in the fourth quarter were $5 million better than street projections. Despite a devilish economy, the company seems to have weathered the economic storm with attractive products at attractive prices. 2009, however, won't be as rosy. SHOO predicts sales will drop 6-8% and earnings per share will be between $1.40 and $1.55, indicating little or no growth on the bottom line. However, recognizing that it won't be a good year, its capital expenditures are pegged at under $5 million, 40% lower than in 2008. With a forward P/E around 10, in the long-term, the shoe just might fit.

Health Management Associates (NYSE:HMA)
The hospital operator announced its fourth quarter earnings on February 23, delivering seven cents per share from continuing operations on $1.11 billion in revenue; both numbers met analyst expectations. For the year, it grew revenues 4% to $4.45 billion. Earnings per share were up 39%, from 49 cents in 2007 to 68 cents in 2008. Despite this, the stock is down 65% in the last year and its forward P/E is less than six.

AmSurg Corp. (Nasdaq:AMSG)
At the close of trading on February 19, the operator of outpatient surgery centers announced it increased earnings per share 13% in the fourth quarter from 36 cents in Q4 2007 to 40 cents in Q4 2008. At the same time, it grew revenues by 8% to $153.1 million. The analyst at Robert W. Baird who covers the stock was so impressed with the final quarter's performance that he upgraded it from "Neutral" to "Outperform." With all its valuation metrics beaten down, this stock is especially appealing. (What's in an analyst report and what should you do with this information? Find out in Analyst Recommendations: Do Sell Ratings Exist?)

Lifetime Fitness (NYSE:LTM)
The Minneapolis-based operator of health clubs announced its earnings prior to the markets opening on February 19, and they were a mixed bag. Revenues in the quarter were up 13.4% to $194 million while earnings per share were down $0.07 to $0.41 (excluding $0.08 charge) from $0.48 in 2007. In 2009, LTM expects revenues between $830-$860 million with earnings between $1.50 and $1.70 a share, both slightly higher than analyst estimates. I wrote about this stock back in April when it was trading in the low 30s. With a 72% haircut in the last year, Lifetime's stock is cheaper than ever.

Vectren Corp. (NYSE:VVC)
On February 18, the Indiana and Ohio gas and electric utility delivered earnings per share of $0.46 in the fourth quarter, $0.07 lower than in the same quarter a year earlier on $707.3 million in revenue. While the fourth quarter was slightly negative, the year as a whole wasn't that bad, with revenues increasing approximately $200 million to $2.5 billion year-over-year and operating income increasing by $3 million to $263.4 million. In October, Vectren announced a 3.1% increase in the annual dividend to $1.34 a share, the 49th consecutive year it's done so. Those looking for a decent yield might have a look at its stock, which is currently yielding around 6.4%.

Bottom Line
While not one of these stocks is perfect, the fact that they did meet expectations suggests that management and the analyst community are at least on the same page, which is a good thing. (Balance risk and return to produce adequate income despite inflation: Build A Dividend Portfolio That Grows With You.)

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