Which Railroad 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 railroad stocks rank via earnings trends:

Kansas City Southern (NYSE:KSU): Current Price $92.42

Fiscal Year 2008 2009 2010 2011 2012
Revenue ($) in millions 1,852 1,480 1,815 2,098 2,239
Diluted EPS ($) 0.60 0.60 1.67 3.00 3.43

These are impressive annual numbers from Kansas City Southern. Both revenue and EPS hit the purple patch in 2010 and later.

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 ($) in millions 530.30 547.50 545.30 577.40 568.40
Diluted EPS ($) 0.87 0.68 1.09 0.82 0.83

The quarterly performance, however, has been somewhat mixed, with sales growth coming in fits and starts. EPS too is under pressure after the June 2000 quarter. Let’s look further…