Which Big Oil 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 5 Big Oil stocks rank via earnings trends:

Talisman Energy Inc. (NYSE:TLM): Current Price $12.41

Fiscal Year 2007 2008 2009 2010 2011
Revenue ($) in millions 7,412 9,257 5,711 6,712 8,194
Diluted EPS ($) 1.85 2.64 0.40 0.60 0.38

Between 2008 and 2011 revenue at Talisman Energy is down by nearly 12%, but EPS is off by almost 85% in that period.

Next, our CHEAT SHEET investing framework asks us to drill down to the recent quarterly data:

Quarter Sep. 30, 2011 Dec. 31, 2011 Mar. 31, 2012 Jun. 30, 2012 Sep. 30, 2012
Revenue ($) in millions 1,956 2,082 2,115 1,869 1,722
Diluted EPS ($) 0.24 -0.11 0.28 0.19 -0.71

We also note that sales are down substantially after March 2012, and EPS took a sharp dive into the red in that latest quarter there. We’ll avoid this one…

Exxon Mobil Corp. (NYSE:XOM): Current Price $88.36

Fiscal Year 2008 2009 2010 2011 2012
Revenue ($) in millions 477,360 310,590 383,220 486,430 482,300
Diluted EPS ($) 8.66 3.98 6.22 8.42 9.70

We like the steady uptrend in both profit and revenue at Exxon after 2009. Revenue is up over 55%, and EPS has grown almost 2 1/2 times.

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 ($) in millions 121,610 124,050 127,360 115,710 115,170
Diluted EPS ($) 1.97 2.00 3.41 2.09 2.20

Though sales and EPS have dropped off after June 2012, it is encouraging that EPS in December 2012 improved well over the previous quarter. We’ll keep Exxon under our lens…

Chevron Corp. (NYSE:CVX): Current Price $114.96

Fiscal Year 2008 2009 2010 2011 2012
Revenue ($) in millions 273,000 171,640 204,930 253,710 241,910
Diluted EPS ($) 11.67 5.24 9.48 13.44 13.32

Both revenue and EPS at Chevron moved into a higher trajectory post-2010.

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 ($) in millions 59,980 60,700 62,610 58,040 60,550
Diluted EPS ($) 2.58 3.27 3.66 2.69 3.70

Except for that slowdown in September 2012, the quarterly numbers show a nice appreciation in EPS, particularly in the latest December 2012 quarter. Chevron stays in our list of probables…

Marathon Oil (NYSE:MRO): Current Price $34.66

Fiscal Year 2008 2009 2010 2011 2012
Revenue ($) in millions 77,960 9,084 12,870 15,280 16,220
Diluted EPS ($) 4.95 2.06 3.61 4.13 2.23

We see that revenue grew nicely at Marathon between 2009 and 2012, though EPS faltered somewhat in 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 ($) in millions 3,809 4,040 3,784 4,161 4,236
Diluted EPS ($) 0.78 0.59 0.56 0.63 0.45

EPS also fell off in that last quarter there, and we’ll have to drop Marathon from our list of contenders…

Suncor Energy Inc. (NYSE:SU): Current Price $31.59

Fiscal Year 2008 2009 2010 2011 2012
Revenue ($) in millions 28,450 24,850 34,350 39,810 40,550
Diluted EPS ($) 2.17 0.89 2.27 2.68 1.80

Suncor posted decent growth in revenue and EPS between 2009 and 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 ($) in millions 10,170 9,930 9,550 9,596 9,566
Diluted EPS ($) 0.91 0.95 0.20 1.01 -0.37

However, that sudden negative EPS in the latest December 2012 quarter leaves us with no alternative but to strike off Suncor from this analysis.

Conclusion

Exxon and Chevron are the final contenders in thisĀ ”E-Squared” investment analysis of Big Oil stocks. However, we pick Chevron because its latest quarter was much better than that of Exxon.

“E = Earnings Are Increasing Quarter-Over-Quarter” is a core component of our successful CHEAT SHEET investing framework. Don’t waste another minute – click here to discover our CHEAT SHEET stock picks now!