Which Tech Goliath has 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 mega-tech stocks rank via earnings trends:

Cisco Systems, Inc. (NASDAQ:CSCO): Current Price $20.99

Fiscal Year 2008 2009 2010 2011 2012
Revenue ($) in millions 39,540 36,120 40,040 43,220 46,060
Diluted EPS ($) 1.31 1.05 1.33 1.17 1.49

We see a steady trend of improvement in sales and EPS at Cisco over the past four years.

Next, our CHEAT SHEET investing framework asks us to drill down to the recent quarterly data:

Quarter Jan. 31, 2012 Apr. 30, 2012 Jul. 31, 2012 Oct. 31, 2012 Jan. 31, 2013
Revenue ($) in millions 11,530 11,590 11,690 11,880 12,100
Diluted EPS ($) 0.40 0.40 0.36 0.39 0.59

We are also impressed with revenue growth during the last four quarters and the improvement in EPS over the last two. Cisco remains as a contender this analysis…

Apple Inc. (NASDAQ:AAPL): Current Price $460.16

Fiscal Year 2008 2009 2010 2011 2012
Revenue ($) in millions 37,490 42,900 65,220 108,250 156,510
Diluted EPS ($) 6.78 9.08 15.15 27.68 44.15

Certainly, a dream run for Apple in these annual numbers.

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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 ($) in millions 46,330 39,190 35,020 35,970 54,510
Diluted EPS ($) 13.87 12.30 9.32 8.66 13.81

The revenue and EPS slide between December 2011 and September 2012 was redeemed by the bumper performance of the company in December 2012. We therefore keep Apple on our radar…

International Business Machines Corp. (NYSE:IBM): Current Price $200.98

Fiscal Year 2008 2009 2010 2011 2012
Revenue ($) in millions 103,630 95,760 99,870 106,920 104,510
Diluted EPS ($) 8.89 10.01 11.52 13.06 14.37

We see that though revenue at IBM has not grown appreciably between 2008 and 2012, EPS has improved by over 60% during that period.

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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 ($) in millions 29,490 24,670 25,780 24,750 29,300
Diluted EPS ($) 4.56 2.61 3.34 3.33 5.13

We also note that IBM pulled out all the stops in December 2012, reporting an excellent quarter on both counts of topline and EPS. A strong candidate here…

Motorola, Inc. (NYSE:MSI): Current Price $61.43

Fiscal Year 2008 2009 2010 2011 2012
Revenue ($) in millions 25,110 6,947 7,617 8,203 8,698
Diluted EPS ($) -13.11 -0.15 1.87 3.41 2.96

We like the steady growth in both revenue and EPS at Motorola Solutions between 2009 and 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 ($) in millions 2,300 1,956 2,148 2,153 2,441
Diluted EPS ($) 0.59 0.49 0.61 0.72 1.14

We are also impressed that turnover improved by over 25%, and EPS more than doubled during March 2012 and December 2012. A strong candidate, we see…

Juniper Networks, Inc. (NYSE:JNPR): Current Price $21.86

Fiscal Year 2008 2009 2010 2011 2012
Revenue ($) in millions 3,572 3,316 4,093 4,449 4,365
Diluted EPS ($) 0.93 0.22 1.15 0.79 0.35

We don’t like the way EPS is trailing off at Juniper networks though sales growth is acceptable.

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 ($) in millions 1,121 1,032 1,074 1,118 1,141
Diluted EPS ($) 0.18 0.03 0.11 0.03 0.19

Juniper Networks has done fairly well over the last three quarters, and we do like that nice bump up in EPS in the latest quarter. Juniper, too, remains on our list…

Conclusion

In this “E-Squared” investment analysis of tech goliaths, we pick Motorola Solutions as the winner for its steady and sustained improvement of revenue and EPS, across both annually and quarterly results.

“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!