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 is your Cheat Sheet to how the top 5 software stocks rank via earnings trends:
Microsoft (NASDAQ:MSFT): Current Price $28.26
|Revenue ($) in millions||60,420||58,440||62,480||69,940||73,720|
|Diluted EPS ($)||1.87||1.62||2.10||2.69||2.00|
Microsoft did a commendable job increasing both revenue and EPS after 2009, though we are concerned about the dip in EPS in year 2012.
Next, our CHEAT SHEET investing framework asks us to drill down to the recent quarterly data:
|Quarter||Dec. 31, 2011||Mar. 31, 2012||Jun. 30, 2012||Sep. 30, 2012||Dec. 31, 2012|
|Revenue ($) in millions||20,880||17,410||18,060||16,010||21,460|
|Diluted EPS ($)||0.78||0.60||-0.06||0.53||0.76|
After posting a negative EPS quarter in June 2012, Microsoft bounced back with solid improvements in EPS in the next two quarters. It stays on our watch list…