Which of These Top 5 Media 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’).

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 media stocks rank via earnings trends:

Discovery Communications, Inc. (NASDAQ:DISCA): Current Price $70.30

Fiscal Year 2008 2009 2010 2011 2012
Revenue ($) in millions 3,382 3,458 3,773 4,235 4,487
Diluted EPS ($) 0.98 1.27 1.52 2.80 2.48

Revenue at Discovery has grown at a nice clip these past five years. EPS, too, has done well, though 2012 was a shade off…

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 ($) in millions 1,137 1,103 1,142 1,076 1,200
Diluted EPS ($) 0.85 0.57 0.76 0.55 0.61

We note that the December quarter saw a sharp improvement in revenue and EPS, leading us to keep Discovery in our list of probables in this analysis…

CBS (NYSE:CBS): Current Price $44.64

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

We like to note that EPS growth is racing ahead of revenue growth at EPS during 2010 and 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 ($) in millions 3,365 3,784 3,924 3,476 3,418
Diluted EPS ($) 0.50 0.55 0.54 0.65 0.60

However, we are concerned that revenue is slowing down after March 2012, and EPS in September 2012 fell sequentially. We’ll drop CBS from the list…

News Corp. (NASDAQ:NWSA): Current Price $28.90

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

News Corp has grown sales well between 2010 and 2012, though EPS halved 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 ($) in millions 8,975 8,402 8,370 8,136 9,425
Diluted EPS ($) 0.42 0.38 -0.61 0.94 1.01

Quarterly sales at News Corp fell between December 2011 and September 2012, but improved sharply in the latest quarter…

Walt Disney Co. (NYSE:DIS): Current Price $55.61

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

Strategic acquisitions helped Disney chalk up solid topline and EPS numbers over the last three years.

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

Unfortunately, these quarterly numbers show rather uneven sales and EPS growth, though the December quarter showed sharp growth. We’ll keep Disney in the reckoning…

Liberty Media Interactive (NASDAQ:LINTA): Current Price $21.58

Fiscal Year 2007 2008 2009 2010 2011
Revenue ($) in millions 7,802 8,079 8,305 8,932 9,616
Diluted EPS ($) 0.69 -1.31 0.43 1.44 0.87

We like the robust growth in revenue every year at Liberty Media, though EPS see-sawed, and felt rather sharply 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 ($) in millions 2,133 3,079 2,314 2,365 2,196
Diluted EPS ($) 0.00 0.50 0.16 0.42 0.07

Unfortunately, the quarterly numbers at Liberty Media are too volatile for our liking, and that massive dip in EPS in September 2012 puts paid to its prospects in this analysis…

Conclusion

Discovery and Disney are the candidates of choice in this “E-Squared” investment of media stocks, both having better overall numbers compared to News Corp. However, we pick Disney as the winner for its excellent annual performance.

“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!