Which Hot Auto Stock has the Strongest Earnings Trend Engine?

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 auto stocks rank via earnings trends:

General Motors (NYSE:GM): Current Price $27.76

Fiscal Year 2008 2009 2010 2011
Revenue ($) in millions 148,980 104,590 135,590 150,280
Diluted EPS ($) -53.47 56.62 2.89 4.58

We’re impressed with the stellar growth seen in GM’s revenue and EPS during 2010 and 2011.

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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 ($) in millions 36,720 37,990 37,760 37,610 37,580
Diluted EPS ($) 1.03 0.24 0.60 0.90 0.89

Revenue however seems to have gone flat over the last five quarters, and EPS levelled off in the last two. We’ll drop GM because of the fall in its EPS in the latest quarter…

Ford Motor Co. (NYSE:F): Current Price $13.02

Fiscal Year 2008 2009 2010 2011 2012
Revenue ($) in millions 143,580 116,280 128,950 136,260 134,300
Diluted EPS ($) -6.50 0.86 1.66 4.94 1.42

Both revenue and EPS at Ford grew nicely between 2009 and 2011, but profitability seems to have dived in 2012.

These stocks are hitting our Profit Targets. Click here now to discover winning stocks!

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 ($) in millions 34,580 32,440 33,210 32,170 36,500
Diluted EPS ($) 3.33 0.35 0.26 0.41 0.40

The last quarter in December saw a decent rise in revenue, but EPS fell by a whisker. We’ll have to drop Ford too…

Toyota Motor Corp. (NYSE:TM): Current Price $102.60

Fiscal Year 2008 2009 2010 2011 2012
Revenue ($) in millions 262,390 209,000 203,690 228,430 226,110
Diluted EPS ($) 10.78 -2.84 1.44 3.14 2.20

Toyota clawed back revenue and EPS growth after the troubles it faced in 2010, though EPS in 2012 was markedly lower than in 2011.

These stocks are hitting our Profit Targets. Click here now to discover winning stocks!

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 ($) in millions 59,680 62,580 61,210 69,370 69,680
Diluted EPS ($) 0.66 0.66 0.871 2.32 2.10

Revenue grew nicely over the last three quarters, but we are disappointed that EPS in September failed to match that of June. Toyota, too, drops off our radar…

Honda Motor Co., Ltd. (NYSE:HMC): Current Price $37.56

Fiscal Year 2008 2009 2010 2011 2012
Revenue ($) in millions 108,030 100,110 92,660 107,240 100,940
Diluted EPS ($) 2.97 0.77 0.81 3.56 1.43

Like Toyota, Honda too bounced back in 2011 after the difficulties in 2010, but seemed to have lost momentum in 2012 as both revenue and EPS fell…

These stocks are hitting our Profit Targets. Click here now to discover winning stocks!

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 ($) in millions 102,370 29,260 30,710 29,270 28,020
Diluted EPS ($) 1.56 0.48 0.92 0.59 0.50

We are also disappointed to see that the last three quarters have been downhill for Honda on both the sales and profits fronts, and we’ll pass it over…

Tesla Motors, Inc. (NASDAQ:TSLA): Current Price $37.04

Fiscal Year 2008 2009 2010 2011
Revenue ($) in millions 14.74 111.94 116.74 204.24
Diluted EPS ($) -12.46 -7.94 -3.04 -2.53

Tesla has been growing sales nicely and chipping away at its losses. In the annual numbers we see that sales are growing year over year while negative EPS has become smaller.

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 ($) in millions 57.67 39.38 30.17 26.65 50.10
Diluted EPS ($) -0.63 -0.79 -0.86 -1.00 -1.05

Unfortunately, quarterly EPS is still stubbornly negative, and rising, ¬†even though revenue almost doubled sequentially in September 2012. We reject Tesla too…

Conclusion

We are afraid that none of these auto stocks qualify for investment according to our”E-Squared” investment analysis because none of them grew earnings quarter over quarter.

“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!