Which Chinese Internet Stocks have the Strongest Earnings Trends?

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 Chinese internet stocks rank via earnings trends:

Sohu.com Inc. (NASDAQ:SOHU): Current Price $46.81

Fiscal Year 2007 2008 2009 2010 2011
Revenue ($) in millions 188.93 429.05 515.24 612.78 852.09
Diluted EPS ($) 0.90 4.06 3.57 3.62 3.93

Sohu is growing both its revenue and EPS nicely during this period, though EPS lags the kind of growth visible on the topline.

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

Quarter Sep. 30, 2011 Dec. 31, 2011 Mar. 31, 2012 Jun. 30, 2012 Sep. 30, 2012
Revenue ($) in millions 232.86 246.15 226.60 255.73 285.38
Diluted EPS ($) 1.17 0.65 0.53 0.28 0.63

Quarterly EPS headed south in the June 2012 quarter, but certainly grew impressively in the latest quarter. We’d like to keep Sohu on our radar…