7 Undervalued Stocks That Crushed Earnings

As the third-quarter earnings season draws to a close, a large share of US-listed companies have topped analyst estimates. Combining the results of firms in the Morningstar US Market Index that have reported earnings with analyst expectations for those yet to publish, earnings are on track to grow 33.4% from the second quarter, below last quarter’s growth of 46.9% but still well above the three-year quarterly average of 16.5%.

More than half of the US-listed stocks covered by Morningstar that reported earnings as of Nov. 9 beat FactSet consensus estimates by 5% or more. Even better for investors looking to put their money to work, analysts believe a few of these stocks remain undervalued.

To highlight these opportunities, we ran a screen for undervalued stocks that crushed this quarter’s earnings and revenue expectations. More details on our screen and comments from Morningstar analysts come later in this article.

7 Undervalued Earnings Crushers

• Arista Networks ANET
• Entegris ENTG
• GE Vernova GEV
• Ionis Pharmaceuticals IONS
• Sony SONY
• Carlyle Investment Management CG
• Vertiv VRT

How Do Third-Quarter Earnings Stack Up?

At the time of writing, 81% of the 838 US-listed stocks covered by Morningstar analysts have reported earnings. Of those, 51% beat FactSet mean estimates by 5% or more, down from 57% last quarter. About 11% missed earnings estimates by 5% or more, slightly less than the 13% last quarter. More companies reported in line with expectations: 38% versus 30% last quarter.

How We Screened for Stocks That Beat Earnings Expectations

While Morningstar analysts pay close attention to earnings, they focus more on long-term results and valuations. One quarter doesn’t usually lead to a change in a stock’s fair value estimate unless new material information affects the assumptions behind that valuation. For example, new data on a drug could raise the probability of its approval, or pricing gains on a key product line could affect an analyst’s long-term thinking. Still, looking at quarterly earnings with valuations in mind can help long-term investors identify opportunities.

We screened for stocks that beat earnings expectations by 10% or more but remain undervalued. To help keep the focus on companies with truly strong results that did not beat expectations through accounting gimmicks or one-time factors, we screened for revenue beats of 5% or higher. We filtered those results for stocks with economic moats, a Morningstar Rating of 4 or 5 stars, and a price/fair value ratio of 0.85 or lower.

Of the 675 US-listed stocks covered by Morningstar analysts that have reported earnings so far, seven met the criteria.

Arista Networks

• Earnings Per Share: Gain of $1.20 versus the consensus estimate of $1.08
• Revenue: $3.66 billion versus the consensus estimate of $3.33 billion
• Morningstar Rating: ★★★★
• Discount to Fair Value: 31%

“Arista posted blowout third-quarter results and provided a huge outlook for 2027. Sales rose 58% year on year to $3.66 billion, and fourth-quarter guidance calls for similar growth. 2027 sales guidance of $18.5 billion implies close to 40% annual growth.

“We raise our fair value estimate for wide-moat Arista to $270 per share from $230, with a higher medium-term growth forecast. Shares popped more than 10% after hours, but still look materially undervalued to us. This is a top pick of ours in technology hardware.”

—William Kerwin, senior equity analyst

Read Kerwin’s full take on Arista Networks here.

Entegris

• Earnings Per Share: Gain of $1.23 versus the consensus estimate of $1.03
• Revenue: $1.01 billion versus the consensus estimate of $925.40 million
• Morningstar Rating: ★★★★
• Discount to Fair Value: 18%

“Entegris reported strong third-quarter earnings as 25% year-over-year revenue growth drove nearly a 60% rise in adjusted operating profits.

“Entegris shares were up nearly 4% on Oct. 29 at the time of writing as the market reacted to strong results and management’s guidance that fourth-quarter revenue would exceed FactSet consensus estimates.

“We raise our fair value estimate to $160 per share from $155 for wide-moat Entegris. The increase is driven by near-term higher sales growth versus our prior forecast as we see sales accelerating in both segments in the second half of 2026 and into 2027.”

—Seth Goldstein, senior equity analyst

Goldstein has more about Entegris here.

GE Vernova

• Earnings Per Share: Gain of $4.81 versus the consensus estimate of $4.03
• Revenue: $12.64 billion versus the consensus estimate of $11.99 billion
• Morningstar Rating: ★★★★
• Discount to Fair Value: 23%

“GE Vernova reported strong third-quarter results. Management raised the midpoint of full-year revenue guidance by about $1 billion to $47 billion and the midpoint of adjusted EBITDA margin guidance by 1% to 14%. It also announced it’s acquiring Trench Group for $9 billion.

“We raise our fair value estimate for narrow-moat GE Vernova to $1,080 per share from $1,050 due to the time value of money. While guidance supported our cash flow assumptions, we’ve lowered our implied long-term multiple for shares to reflect a higher required rate of return.”

—Joshua Aguilar, director of equity research

The rest of Aguilar’s take on GE Vernova can be found here.

Ionis Pharmaceuticals

• Earnings Per Share: Loss of $0.66 versus the consensus estimate of $1.23
• Revenue: $243.00 billion versus the consensus estimate of $178.17 billion
• Morningstar Rating: ★★★★★
• Discount to Fair Value: 63%

“Ionis reported third-quarter revenue of $243 million, up 55% year over year. While management reaffirmed 2026 revenue, operating loss, and cash guidance, it cut 2026 Tryngolza (for sHTG/FCS) revenue guidance by 50% to approximately $50 million, triggering a 21% decline in the shares on Nov. 9.

“We lowered narrow-moat Ionis’ fair value estimate to $80 per share from $84, reflecting a slower near-term commercial ramp of Tryngolza. Shares are trading at a steep discount in 5-star territory.”

—Rachel Elfman, equity analyst

Elfman has more about Ionis stock here.

Sony

• Earnings Per Share: Gain of $0.49 versus the consensus estimate of $0.40
• Revenue: $21.67 billion versus the consensus estimate of $20.15 billion
• Morningstar Rating: ★★★★
• Discount to Fair Value: 20%

“Sony’s second-quarter operating income rose 45% year on year. Game & network services, music, and pictures posted their highest-ever second-quarter profits, while imaging & sensing solutions reached an all-time high. Accordingly, Sony raised its full-year operating income guidance by 9%.

“We maintain Sony’s JPY 5,400 fair value estimate and view its shares as undervalued. Despite strong earnings growth, the shares remain below year-ago levels, reflecting excessive market concern that artificial intelligence will erode the value of Sony’s intellectual property.”

—Kazunori Ito, director of equity research

Read Ito’s full take on Sony here.

Carlyle Investment Management

• Earnings Per Share: Gain of $1.12 versus the consensus estimate of $0.97
• Revenue: $994.50 million versus the consensus estimate of $920.92 million
• Morningstar Rating: ★★★★
• Discount to Fair Value: 19%

“Carlyle exited September 2026 with $329.6 billion in fee-earning assets, down 1.4% sequentially and 0.7% year over year. Even so, revenue increased 27.1% year over year to $995 million, while fee-related earnings declined 6.2% to $293 million. Distributable earnings came in above expectations.

“Increased uncertainty about the equity and credit markets tied to fiscal, tariff, and monetary policies, as well as economic growth, and increased concerns about the private credit markets have pressured the shares of most of the alternative asset managers. It also hasn’t helped that the Fed has started raising rates again, which not only affects deployment and realization activity but also the performance of Carlyle’s credit alternatives business.”

—Greggory Warren, senior equity analyst

Take a deeper dive into Warren’s outlook for Carlyle.

Vertiv

• Earnings Per Share: Gain of $2.21 versus the consensus estimate of $1.82
• Revenue: $4.31 billion versus the consensus estimate of $3.75 billion
• Morningstar Rating: ★★★★
• Discount to Fair Value: 20%

“Vertiv reported third-quarter sales growth of 61% year over year, driven by strength across all regions, and management raised its full-year revenue and earnings per share guidance. The shares were up 17% in Oct. 28 trading.

“Vertiv remains a great litmus test for artificial intelligence-related spending. We estimate the company derives over 85% of revenue from the data center end market.

“We raise our fair value estimate to $250 per share from $236 to reflect our slightly more bullish near-term revenue growth expectations. Vertiv’s shares now trade close to our fair value estimate.”

—Nicholas Lieb, equity analyst

The rest of Lieb’s take on Vertiv can be found here.