Which Payment Services 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 4 payment services stocks rank via earnings trends:

Western Union Co. (NYSE:WU): Current Price $14.40

Fiscal Year 2008 2009 2010 2011 2012
Revenue ($) in millions 5,282 5,084 5,193 5,491 5,665
Diluted EPS ($) 1.24 1.21 1.36 1.84 1.69

We like the generally upward trend in revenue and EPS at Western Union, though we note that EPS fell off a bit in 2012.

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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 ($) in millions 1,431 1,393 1,425 1,422 1,425
Diluted EPS ($) 0.73 0.40 0.44 0.45 0.40

Unfortunately, the quarterly results are rather flat, and EPS in December 2012 is down some. We reject Western Union from this analysis…

EZCORP Inc. (NASDAQ:EZPW): Current Price $22.06

Fiscal Year 2008 2009 2010 2011 2012
Revenue ($) in millions 457.40 597.46 733.04 869.32 992.47
Diluted EPS ($) 1.21 1.42 1.96 2.43 2.81

These are solid numbers from EZCorp Inc: both revenue and EPS have doubled between 2000 and 2012.

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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 ($) in millions 248.87 256.28 228.96 258.35 277.13
Diluted EPS ($) 0.78 0.73 0.56 0.74 0.59

But we reluctantly drop EZCorp from this analysis because it reported a fall in its EPS in the December 2012 quarter.

Cash America International, Inc. (NYSE:CSH): Current Price $50.47

Fiscal Year 2008 2009 2010 2011 2012
Revenue ($) in millions 1,031 1,120 1,293 1,541 1,800
Diluted EPS ($) 2.70 3.17 3.67 4.25 3.42

Except for the fall in EPS in December 2012, a rather impressive set of numbers from Cash America, with both revenue and EPS growing at a fast clip.

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 ($) in millions 431.50 457.49 411.64 439.69 491.60
Diluted EPS ($) 1.20 1.30 0.94 0.37 0.79

The company reports a smart jump in sales and EPS in December 2012, keeping Cash America in the race in this analysis…

First Cash Financial Services Inc. (NASDAQ:FCFS): Current Price $54.71

Fiscal Year 2008 2009 2010 2011 2012
Revenue ($) in millions 319.09 355.28 423.26 521.30 595.95
Diluted EPS ($) -0.71 1.65 1.86 2.47 2.70

Surely an impressive performance from First Cash here: revenue is up 87% over 2008 and EPS has grown by over 60% over 2009.

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 ($) in millions 147.03 135.12 132.78 149.70 179.24
Diluted EPS ($) 0.70 0.58 0.56 0.64 0.93

We are encouraged by the steady improvement in quarterly EPS after March 2012, and keep First Cash in the list of eligible candidates.

Conclusion

In this “E-Squared” investment analysis of payment services stocks, First Cash Financial Services (NASDAQ:FCFS) is the winner because of its better record of increasing earnings per share 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!