When Beating The Consensus Isn’t Enough
In a world where better-than-expected is the new normal companies that actually impress the market are hard to find. Often times the results are a one-off thing, hampered by an outlook for slowing growth, or coupled with weak guidance. That’s why the companies are on our list today are so attractive. They not only beat their consensus targets but they raised guidance above an already-increasing outlook for earning and their shares are responding positively to the news.
1. Dynatrace Rockets Higher After Earnings Smasher
Dynatrace (NYSE:DT) is a cloud-based SaaS growing by double-digits. The company reported a 28% increase in topline revenue that beat the consensus by 611 basis points. The strength carried through to the bottom line as well delivering solid gains on the bottom line as well. The gains were driven by an increase in subscription revenue, up 33% YOY, and a 35% increase in ARR. Actions taken during the quarter helped drive the gains and include increased collaboration with both Google (NASDAQ:GOOGL) Cloud Platform and Microsoft (NASDAQ:MSFT) Azure cloud platforms.
As for guidance, the company is expecting to see subscription revenue growth in the range of 32% to 33% drive a 26% to 28% increase in net revenue. On the bottom line, EPS above $0.13 is also above the consensus $0.13. Shares of Dynatrace surged more than 10% on the news to set a new all-time high and look ready to continue higher.
DT Stock Chart
2. Avery Dennison Puts A Label On eCommerce
Avery Dennison Corp (NYSE:AVY) is much more than just labels but labels are at the core of its business and business is booming. Not only is the company boosted by eCommerce sales along its own revenue channels but by the heightened level of eCommerce, e-Communication, and e-based work that most of us are doing now. The company just reported a 12.3% increase in YOY sales that accelerated by double-digits sequentially as well. The company reported strength in all segments with Label & Graphic up 10%, Industrial & Healthcare up 10%, and Retail Branding & Information Solutions up 20%.
Looking forward the company is expecting full-year adjusted earnings in the range of $7.65 to $8.05 versus the consensus of $7.35. That’s great news not only for growth investors but also for those looking for dividends because it improves the company’s already healthy dividend and positive for an 11th dividend increase. Shares of AVY are up more than 6.0% on the news.
AVY Stock Chart
3. Ingredion Is Ready To Rocket Higher
When we say that Ingredion (NYSE:INGR) has a sweet business believe it, the company sells starches and sweeteners for a variety of consumption-focused industries. After a mild hiccup to operations in the 2nd quarter of 2020 the company has rebounded strongly and returned to steady if not accelerating YOY growth. The 4th quarter reports show revenue is up 2.6% from last year, slower than the 3Q pace of 3.1%, but it is better than expected and comes with an even sweeter outlook.
The company says that its business is improving on rising demand in all four of its operating regions that are supported by volume, pricing, and mix. Looking forward, the company expects revenue to be up modestly with costs remaining flat. That’s good news because it’ shows earnings leverage that we think will result in much better than expected EPS.
Ingredion’s dividend makes an investment in the company even sweeter. The stock pays $2.56 annually for a yield near 3.4% and it is a safe 3.4% too. The payout ratio is running about 42% of 2021 earnings and 39% in 2021 with free cash flow to spare. The company is caring some debt but we can expect that to come down in the coming year. Even so, there is no reason not to expect the 11th increase from this company sometime in mid-2021 as well.
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