The stock market on Tuesday was jam-packed with so many shocking upside earnings surprises that Jim Cramer was left astonished.
“It is important to remember that the magnitude and number of upside surprises versus downside letdowns can often determine the direction of the day,” the “Mad Money” host said.
The best beat by far for Cramer was Burlington Stores, which had a history of blowing away the numbers and then raising its forecast, with analysts aggressively following along. However, this can be dangerous because eventually analysts will want to get ahead of the upside surprises to show the company isn’t just trying to manufacture the surprise, Cramer said.
“The expectations were high, but when Burlington reported this morning, it was astonishing,” Cramer said.
Wall Street expected Burlington to earn 33 cents a share, and it earned 51 cents and dramatically raised earnings guidance. It also reported strong same-store sales.
The quarter was picture perfect, Cramer said. Burlington made money in every possible way it could, with the right inventory and the right prices. It made more money off of more customers. This proved to Cramer that the off-price business model of TJX, Ross Stores and Burlington continues to be successful.
The only retailer that exceeds Burlington is Children’s Place, Cramer said, which was up again for a third straight day.
The next upside surprise came from Analog Devices, which has managed to transform itself into a play on the internet of things, the connected car and cybersecurity, along with factory and process automation in the past few years.
Analog is set to buy Linear Technology to be one of the top two semiconductor makers for the industrial, automotive and communications infrastructure sectors. Analog CEO Vincent Roche predicted on the company’s conference call that when the deal closes, the company will be a “free cash flow engine unmatched in the industry.”
Dollar Tree surprised as well, as it took estimates down only to beat them the next time it reported. Its last quarter was considered a disappointment, but it changed course when it reported an earnings beat with a 1.7 percent same-store sales increase, while Wall Street was only looking for 1.4 percent. The stock roared more than 8 percent on the news on Tuesday.
Signet Jewelers was an animal of its own in the upside surprise category. It actually reported that same-store sales fell, which would normally cause a stock to get hammered. However, the same-store sales weren’t as bad as expected, and it delivered a 10-cent earnings beat.
Thus, the stock flew more than 2 percent.
“The complexion and the complexity of the wording and the number determine how things go in a given session,” Cramer said.
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