Which of These Top 5 Cable and Satellite 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’).

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Here’s your Cheat Sheet to how the top 5 cable and satellite stocks rank via earnings trends:

Comcast (NASDAQ:CMCSA): Current Price $41.24

Fiscal Year 2008 2009 2010 2011 2012
Revenue ($) in millions 34,420 35,760 37,940 55,840 62,570
Diluted EPS ($) 0.86 1.26 1.29 1.50 2.28

Revenue and EPS growth appear to be on steroids at Comcast during the years under review.

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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 ($) in millions 15,040 14,880 15,210 16,540 15,940
Diluted EPS ($) 0.46 0.45 0.50 0.78 0.56

Unfortunately, Comcast drops off from our list because of its under-performance during the December 2012 quarter…

DIRECTV (NASDAQ:DTV): Current Price $49.19

Fiscal Year 2008 2009 2010 2011 2012
Revenue ($) in millions 19,690 21,560 24,100 27,230 29,740
Diluted EPS ($) 1.37 0.95 2.30 3.47 4.58

Solid growth at DirectTV too: revenue is up 38% after 2009, and EPS has grown almost 5 times…

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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 ($) in millions 7,463 7,046 7,224 7,416 8,054
Diluted EPS ($) 1.01 1.07 1.09 0.90 1.55

We note good revenue growth over the last four quarters, and are impressed with that jump in EPS in December 2012. We’ll keep DirecTV on watch…

Dish Network Corp. (NASDAQ:DISH): Current Price $36.93

Fiscal Year 2007 2008 2009 2010 2011
Revenue ($) in millions 11,090 11,620 11,660 12,640 14,050
Diluted EPS ($) 1.68 1.98 1.42 2.20 3.39

Both profits and revenue are up sharply between 2009 and 2011 at Dish.

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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 ($) in millions 3,603 3,631 3,582 3,572 3,523
Diluted EPS ($) 0.71 0.71 0.80 0.50 -0.35

Unfortunately, the quarterly numbers are rather disappointing with revenue remaining flat and a negative EPS reported in September 2012. We’ll drop Dish…

Time Warner Inc. (NYSE:TWX): Current Price $53.52

Fiscal Year 2008 2009 2010 2011 2012
Revenue ($) in millions 26,430 25,390 26,890 28,970 28,730
Diluted EPS ($) -11.22 2.07 2.25 2.71 3.09

We are impressed with the sustained improvement in EPS at Time Warner after 2008.

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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 ($) in millions 8,193 6,979 6,744 6,842 8,164
Diluted EPS ($) 0.75 0.59 0.44 0.86 1.21

The company obviously had a blowout quarter in December 2012 with a sharp improvement in revenue and EPS. Time Warner remains in the reckoning…

Time Warner Cable Inc. (NYSE:TWC): Current Price $86.94

Fiscal Year 2008 2009 2010 2011 2012
Revenue ($) in millions 17,200 17,870 18,870 19,680 21,390
Diluted EPS ($) -22.55 3.05 3.64 4.97 6.90

Business is on a roll at Time Warner Cable, and we are impressed with the solid growth in revenue and EPS after 2009. 

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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 ($) in millions 4,993 5,134 5,404 5,363 5,485
Diluted EPS ($) 1.72 1.20 1.43 2.60 1.68

However, EPS took a hit in the December 2012 quarter, and we reluctantly drop Time Warner Cable from the list of probables…

Conclusion

It’s a tough choice to make between DirecTV (NASDAQ:DTV) and Time Warner Inc (NYSE:TWC), but we’ll go with the latter because of its better earnings growth momentum in the recent quarters.

“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!