Which Apparel Stocks have the Strongest Earnings Trends: Nike, Skechers, Deckers Outdoor, Under Armour or Crocs?

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’).

Stocks with improving earnings metrics are worthy of your extra attention. Click here to discover our CHEAT SHEET stock picks now!

Here’s your Cheat Sheet to how the top 5 apparel stocks rank via earnings trends:

Skechers USA Inc. (NYSE:SKX): Current Price $21.91

Fiscal Year 2008 2009 2010 2011 2012
Revenue ($) in millions 1,441 1,436 2,007 1,606 1,560
Diluted EPS ($) 1.19 1.16 2.78 -1.39 0.19

We are concerned that revenue at Skechers has been tapering off after 2010, with EPS also obviously under pressure.

Next, our CHEAT SHEET investing framework asks us to drill down to the recent quarterly data:

Quarter Dec. 31, 2011 Mar. 31, 2012 Jun. 30, 2012 Sep. 30, 2012 Dec. 31, 2012
Revenue ($) in millions 283.25 351.27 384.00 429.43 395.62
Diluted EPS ($) -1.18 -0.07 -0.04 0.22 0.08

Quarterly revenue and EPS grew nicely up to September 2012, but fell off sharply in the last quarter. We’ll look elsewhere for more promising candidates…