Earnings trends are extremely important when evaluating stocks. At Wall St. Cheat Sheet, we view increasing earnings quarter-over-quarter as a simple way to gauge whether costs and the business model are stable. Then we like to analyze whether the company is outperforming peers in the sector. This is what we call the “E-Squared” investment analysis (‘E = Earnings Are Increasing Quarter-Over-Quarter’ + ‘E = Excellent Relative Performance Versus Peers and Sector’).
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Here’s your Cheat Sheet to how the top 4 brokerage stocks rank via earnings trends:
Charles Schwab Corp. (NYSE:SCHW): Current Price $15.45
|Revenue ($) in millions||5,150||4,193||4,248||4,691||4,883|
|Diluted EPS ($)||1.05||0.68||0.38||0.70||0.69|
Schwab has been very inconsistent with earnings since 2007. Clearly, this is not a strong trend for EPS.
Let’s take a closer look at the quarterly data:
|Quarter||Dec. 31, 2011||Mar. 31, 2012||Jun. 30, 2012||Sep. 30, 2012||Dec. 31, 2012|
|Revenue ($) in millions||1,113||1,189||1,283||1,196||1,215|
|Diluted EPS ($)||0.12||0.15||0.20||0.19||0.15|
Earnings over the last two quarters are slowing down, and we need to look for better candidates…