Which of These Healthcare Stocks Has 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’).

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Here’s your Cheat Sheet to how these top healthcare stocks rank via earnings trends:

WellCare Health Plans, Inc. (NYSE:WCG): Current Price $60.52

Fiscal Year 2008 2009 2010 2011 2012
Revenue ($) in millions 6,522 6,878 5,440 6,107 7,409
Diluted EPS ($) -0.89 0.95 -1.26 6.10 4.22

We note a somewhat erratic record at WellCare, with both sales and EPS swinging widely.

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 ($) in millions 1,600 1,791 1,811 1,818 1,988
Diluted EPS ($) 1.96 1.18 1.06 0.87 1.11

Nonetheless, we are impressed with the sustained revenue growth over the last 5 quarters and the more or less steady EPS. We’ll keep WellCare on watch…