Which Tobacco Stock 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’).

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 4 tobacco stocks rank via earnings trends:

Lorillard, Inc. (NYSE:LO): Current Price $41.04

Fiscal Year 2008 2009 2010 2011 2012
Revenue ($) in millions 4,204 5,233 5,932 6,466 6,623
Diluted EPS ($) 1.717 1.92 2.26 2.663 2.81

We see healthy numbers from Lorillard with sustained year-over-year growth in both revenue and EPS.

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 ($) in millions 1,617 1,526 1,731 1,661 1,704
Diluted EPS ($) 0.7633 0.5667 0.7233 0.72 0.80

The quarterly results are somewhat erratic, but we note that EPS in the latest quarter is better than the earlier one. We’ll keep this stock under our lens…