Post Apple Earnings: Which Computer 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 computer stocks rank via earnings trends:

Dell Inc. (NASDAQ:DELL): Current Price $13.07

Fiscal Year 2008 2009 2010 2011 2012
Revenue ($) in millions 61,130 61,100 52,900 61,490 62,070
Diluted EPS ($) 1.31 1.25 0.73 1.35 1.88

Dell is not doing much in the way of growing its revenue, which has remained essentially flat over the five year span we see here. However, EPS has shown a rising trend from 2010 through 2012.

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

Quarter Oct. 31, 2011 Jan. 31, 2012 Apr. 30, 2012 Jul. 31, 2012 Oct. 31, 2012
Revenue ($) in millions 15,360 16,030 14,420 14,480 13,720
Diluted EPS ($) 0.49 0.42 0.36 0.42 0.27

On its quarterly results, Dell is facing falling sales and erratic EPS. In the latest quarter, EPS is the lowest among all the five quarters reviewed here. Dell does not quite make the grade…

Hewlett-Packard (NYSE:HPQ): Current Price $17.20

Fiscal Year 2008 2009 2010 2011 2012
Revenue ($) in millions 118,360 114,550 126,030 127,240 120,360
Diluted EPS ($) 3.25 3.14 3.69 3.32 -6.41

EPS has fallen in the last three years and is negative in 2012. HP sure doesn’t look too promising…

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

Quarter Oct. 31, 2011 Jan. 31, 2012 Apr. 30, 2012 Jul. 31, 2012 Oct. 31, 2012
Revenue ($) in millions 32,120 30,040 30,690 29,670 29,960
Diluted EPS ($) 0.17 0.73 0.80 -4.49 -3.45

The quarterly results are none too impressive either. Declining revenues and negative EPS in the last two quarters take HP out of the reckoning…

Microsoft (NASDAQ:MSFT): Current Price $28.01

Fiscal Year 2008 2009 2010 2011 2012
Revenue ($) in millions 60,420 58,440 62,480 69,940 73,720
Diluted EPS ($) 1.87 1.62 2.10 2.69 2.00

That’s a nice set of sales numbers by Microsoft, except for a blip in 2009. However, we are concerned that EPS is more or less flat across the five-year period, and has fallen in 2012.

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 ($) in millions 17,370 20,880 17,410 18,060 16,010
Diluted EPS ($) 0.68 0.78 0.60 -0.06 0.53

The quarterly numbers from Microsoft are rather volatile. In the September 2012 quarter, revenue has fallen but EPS has taken an impressive hike…

Apple Inc. (NASDAQ:AAPL): Current Price $460.05

Fiscal Year 2008 2009 2010 2011 2012
Revenue ($) in millions 37,490 42,900 65,220 108,250 164,680
Diluted EPS ($) 6.78 9.08 15.15 27.68 44.09

There’s solid growth in revenue and EPS here: Over the past five years, revenue has more than quadrupled, and EPS in 2012 is 6.5 times what it was in 2008.

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 ($) in millions 46,330 39,190 35,020 35,970 54,500
Diluted EPS ($) 13.87 12.30 9.32 8.66 13.81

Unfortunately, the quarterly results are spooking Wall Street for one important reason: year-over-year EPS growth is slowing. Although Apple is up quarter-over-quarter, institutional investors are now waiting for the next big thing to get back into the stock…

Conclusion

Unfortunately, only Apple passes our “E-Squared” investment analysis. However, the stock clearly needs a few weeks to find its sea legs after earnings.

“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!