Which of These Top 5 Media 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’).

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

Discovery Communications, Inc. (NASDAQ:DISCA): Current Price $70.30

Fiscal Year 2008 2009 2010 2011 2012
Revenue ($) in millions 3,382 3,458 3,773 4,235 4,487
Diluted EPS ($) 0.98 1.27 1.52 2.80 2.48

Revenue at Discovery has grown at a nice clip these past five years. EPS, too, has done well, though 2012 was a shade off…

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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 ($) in millions 1,137 1,103 1,142 1,076 1,200
Diluted EPS ($) 0.85 0.57 0.76 0.55 0.61

We note that the December quarter saw a sharp improvement in revenue and EPS, leading us to keep Discovery in our list of probables in this analysis…