5 Undervalued Stocks That Crushed Q4 Earnings

As the fourth-quarter earnings season draws to a close, a large share of US-listed companies have topped analyst estimates. Tech stocks especially have had an eventful earnings season, with the largest players continuing to beat estimates even as market reactions have been mixed, especially for software companies.

Combining the results of firms in the Morningstar US Market Index that have reported earnings with the analyst expectations for those yet to publish, earnings are on track to grow 12.4% from the third quarter, slightly below last quarter’s 13.2% but still above the three-year average of 7.8%.

At the same time, nearly half of the US-listed stocks covered by Morningstar that reported earnings as of Feb. 26 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 expectations for earnings and revenue for the quarter. More details on our screen and comments from Morningstar analysts can be found later in this article.

5 Undervalued Earnings Crushers

• Advanced Micro Devices AMD
• Apollo Global Management APO
• Broadridge Financial Solutions BR
• Fresenius Medical Care FMS
• Reddit RDDT

How Do Fourth-Quarter Earnings Stack Up?

At the time of writing, 86% of the 835 US-listed stocks covered by Morningstar analysts have reported earnings. Of those, 43% beat the FactSet mean estimates for their earnings by 5% or more, down from the 52% seen last quarter. About 15% missed earnings estimates by 5% or more, just above the 13% last quarter. More companies reported in line with expectations: 42% versus 35% last quarter.

How We Screened for Stocks That Beat Earnings Expectations

While Morningstar analysts pay close attention to earnings, they focus 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 15% 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 also screened for revenue beats of 5% or higher. We filtered those results for stocks with economic moats and a Morningstar Rating of 4 or 5 stars.

Of the 715 US-listed stocks covered by Morningstar analysts that have reported earnings so far, five met the criteria.

Advanced Micro Devices

• Earnings Per Share

  : Gain of $1.53 versus the consensus estimate of $1.32

• Revenue

  : $10.3 billion versus the consensus estimate of $9.7 billion

• Morningstar Rating

  : ★★★★

• Discount to Fair Value

  : 30%

“Advanced Micro Devices reported fourth-quarter revenue of $10.3 billion, up 34% year over year, up 11% sequentially, and ahead of guidance. AMD’s first-quarter revenue forecast of $9.8 billion is ahead of FactSet consensus estimates and would represent 32% growth year over year.

“AMD received a revenue boost of $390 million from previously banned MI308 chip sales into China. Still, AMD’s core data center chip business fared well with sequential growth in artificial intelligence accelerators (GPUs) and strong demand for x86 server processors (CPUs) for traditional workloads.

“We maintain our $270 fair value estimate for narrow-moat AMD. Shares sold off about 7% after hours, and like the selloff in Intel’s shares after earnings, our best guess is that investors may have been too optimistic about the revenue growth seen in server CPUs.”

—Brian Colello, senior equity analyst

Apollo Global Management

• Earnings Per Share

  : Gain of $2.47 versus the consensus estimate of $2.04

• Revenue

  : $9.9 billion versus the consensus estimate of $4.8 billion

• Morningstar Rating

  : ★★★★

• Discount to Fair Value

  : 21%

“Apollo ended December with $709 billion in fee-earning assets, up 3.5% sequentially and 24.7% year over year. Fee-related earnings increased 24.5% year over year to $690 million in the fourth quarter, and adjusted net income increased 13.2% to $1.5 billion.

“We reiterate our $150 fair value estimate for narrow-moat-rated Apollo and view the shares as slightly undervalued right now. Increased uncertainty about the equity and credit markets tied to fiscal, tariff, and monetary policies and economic growth and increased concerns about the private credit market (and more recently the segment’s ties with the artificial intelligence boom) have pressured the share prices of most of the alternative-asset managers.”

—Greggory Warren, senior equity analyst

Broadridge Financial Solutions

• Earnings Per Share

  : Gain of $1.59 versus the consensus estimate of $1.36

• Revenue

  : $1.7 billion versus the consensus estimate of $1.6 billion

• Morningstar Rating

  : ★★★★★

• Discount to Fair Value

  : 39%

“Broadridge reported a solid fiscal second quarter with revenue and adjusted EPS edging FactSet consensus estimates, while the firm provided a slightly higher EPS outlook. Shares initially ticked higher but fell 5% to 6% during Feb. 2 trading amid a broader slump in information services stocks.

“Broadridge shares are now down more than 25% from August 2025 highs. We attribute this primarily to a general slump in software stocks related to artificial intelligence concerns and weakness among Broadridge’s peers (FIS Global FIS and Fiserv FISV are part of Broadridge’s proxy peer group).

“Overall, there was little that would change our long-term view of the firm, and we maintain our wide moat rating and fair value estimate of $290. Broadridge’s equity position growth continues to support our thesis that it is a beneficiary of direct indexing.”

—Rajiv Bhatia, equity analyst

Fresenius Medical Care

• Earnings Per Share

  : Gain of $0.85 versus the consensus estimate of $0.65

• Revenue

  : $6.0 billion versus the consensus estimate of $5.7 billion

• Morningstar Rating

  : ★★★★

• Discount to Fair Value

  : 40%

“In the fourth quarter, Fresenius delivered growth of 8% in organic revenue, 53% in adjusted operating income, and 68% in adjusted EPS. Including headwinds like investments in a new product launch, it issued guidance for roughly stable 2026 operating profits. Shares fell about 3% in early trading.

“Fresenius significantly outperformed our expectations in 2025 on dialysis services strength, and the firm looks likely to roughly meet our expectations in 2026, despite investments needed to support the US launch of its 5008x CAREsystem for high-volume hemodiafiltration.

“After a transition year with multiple headwinds in 2026, we expect Fresenius will continue marching toward its midteens operating margin goal from 11% in 2025, which supports our narrow moat rating since economic profitability looks likely to rise from close to capital costs in 2025.”

—Julie Utterback, senior equity analyst

Reddit

• Earnings Per Share

  : Gain of $1.24 versus the consensus estimate of $0.94

• Revenue

  : $726 million versus the consensus estimate of $666 million

• Morningstar Rating

  : ★★★★

• Discount to Fair Value

  : 25%

“Reddit reported solid fourth-quarter results, led by a 70% year-over-year revenue growth that exceeded the high end of guidance. This performance was primarily driven by continued improvement in ad monetization, reflected in the 42% year-over-year growth in average revenue per unique, or ARPU.

“Reddit’s focus on delivering stronger advertiser outcomes through machine learning improvements and lower-funnel performance, like conversions and app installs, started to show in the quarter. The healthy return on ad spending led to better pricing and, in turn, boosted ARPU.

“The combination of a stellar 2025 and positive 2026 outlook helped reassure that the company still has a long runway ahead. We maintain our $200 fair value estimate for narrow-moat Reddit, and even with shares trending higher on the release, we still view the stock as undervalued.”

—Malik Ahmed Khan, senior equity analyst