Which of These Top 5 Entertainment Stocks have the Strongest Earnings Trends: Disney, CBS, Viacom, Comcast or News Corp?

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 these top 5 entertainment stocks rank via earnings trends:

Walt Disney Co. (NYSE:DIS): Current Price $54.66

Fiscal Year 2008 2009 2010 2011 2012
Revenue ($) in millions 37,840 36,150 38,060 40,890 42,280
Diluted EPS ($) 2.28 1.76 2.03 2.52 3.13

We see excellent growth from both the revenue and EPS numbers. These successes are have been boosted by highly successful acquisitions.

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 ($) in millions 10,780 9,629 11,090 10,780 11,340
Diluted EPS ($) 0.80 0.63 1.02 0.68 0.77

Despite the small blip in the quarterly numbers in September 2012, Disney bounced back with far better results in the December 2012 quarter. We’ll keep the company on our list as it has increased earnings quarter-over-quarter…

News Corp. (NASDAQ:NWSA): Current Price $28.46

Fiscal Year 2008 2009 2010 2011 2012
Revenue ($) in millions 33,000 30,420 32,780 33,400 33,710
Diluted EPS ($) 1.81 -1.29 0.97 1.04 0.47

Annual revenues are flat and EPS is down at this Murdoch-owned media conglomerate.

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 ($) in millions 8,975 8,402 8,370 8,136 9,425
Diluted EPS ($) 0.42 0.38 -0.61 0.94 1.01

On the quarterly front, there was a turnaround of sorts in September 2012, while the next quarter saw a big jump in revenue and a substantial improvement in EPS. We’ll watch this one…

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CBS (NYSE:CBS): Current Price $42.83

Fiscal Year 2007 2008 2009 2010 2011
Revenue ($) in millions 14,070 13,950 13,020 14,060 14,240
Diluted EPS ($) 1.73 -17.43 0.33 1.04 1.92

After CBS hit bottom in the year 2008, it certainly got its act together and improved revenue and profitability in the most recent years.

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 ($) in millions 3,365 3,784 3,924 3,476 3,418
Diluted EPS ($) 0.50 0.55 0.54 0.65 0.60

But it seems to be tiring, judging from the quarterly results. Both revenue and EPS have turned down in the September 2012 quarter. We’ll move on from this one for now and wait to see how they announce earnings this week on February 14…

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Comcast (NASDAQ:CMCSA): Current Price $38.75

Fiscal Year 2007 2008 2009 2010 2011
Revenue ($) in millions 31,060 34,420 35,760 37,940 55,840
Diluted EPS ($) 0.83 0.86 1.26 1.29 1.50

These are certainly good numbers from Comcast: we see sales have grown 79% across the period under review, and EPS has bounced 80%.

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 ($) in millions 14,340 15,040 14,880 15,210 16,540
Diluted EPS ($) 0.33 0.46 0.45 0.50 0.78

The quarterly results are encouraging, too. Both revenue and EPS have marched up in the latest two quarters. We’ll keep Comcast in the race…

Viacom, Inc. (NASDAQ:VIAB): Current Price $59.28

Fiscal Year 2008 2009 2010 2011 2012
Revenue ($) in millions 13,950 13,260 9,337 14,910 13,890
Diluted EPS ($) 2.00 2.65 1.40 3.59 3.69

Here’s a decent set of annual results from Viacom. After an unsatisfactory year in 2010, the company has improved EPS nicely in the following years.

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 ($) in millions 3,952 3,331 3,241 3,363 3,314
Diluted EPS ($) 0.38 1.07 1.01 1.23 0.92

However, Viacom saw its earnings and revenue drop off in December 2012. Regrettably, we must remove it from our list…

Conclusion

In this “E-Squared” investment analysis of entertainment stocks, we have to choose between Disney, Newscorp and Comcast. We find that revenue and earnings momentum has really taken off at Comcast over its last two years as well as the latest two quarters, making it our Entertainment stock of choice. However, the company releases earnings on February 13, so keep an eye on how they unfold.

“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!