Which Payment Services 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 4 payment services stocks rank via earnings trends:

Western Union Co. (NYSE:WU): Current Price $14.40

Fiscal Year 2008 2009 2010 2011 2012
Revenue ($) in millions 5,282 5,084 5,193 5,491 5,665
Diluted EPS ($) 1.24 1.21 1.36 1.84 1.69

We like the generally upward trend in revenue and EPS at Western Union, though we note that EPS fell off a bit in 2012.

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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 ($) in millions 1,431 1,393 1,425 1,422 1,425
Diluted EPS ($) 0.73 0.40 0.44 0.45 0.40

Unfortunately, the quarterly results are rather flat, and EPS in December 2012 is down some. We reject Western Union from this analysis…