Which Ag Stock has the Strongest Earnings Trends?

February 15, 2013

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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 agriculture stocks rank via earnings trends:

Deere & Co. (NYSE:DE): Current Price $90.54

Fiscal Year	2008	2009	2010	2011	2012
Revenue ($) in millions	28,440	23,110	26,000	32,010	36,160
Diluted EPS ($)	4.70	2.06	4.35	6.63	7.63

We see that Deere sharply grew both revenue and EPS between 2009 and 2012.

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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 ($) in millions	6,766	10,010	9,590	9,792	7,421
Diluted EPS ($)	1.30	2.61	1.98	1.74	1.65

Unfortunately, we see that both quarterly revenue and EPS have turned south after April 2012, and we must drop Deere from the reckoning…

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