Which Healthcare Stocks Have the Strongest Earnings Trends?

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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’).

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 healthcare stocks rank via earnings trends:

Unitedhealth Group, Inc. (NYSE:UNH): Current Price $54.56

Fiscal Year 2008 2009 2010 2011 2012
Revenue ($) in millions 81,190 87,140 94,160 101,860 110,620
Diluted EPS ($) 2.40 3.24 4.10 4.73 5.28

Unitedhealth has grown both revenue and earnings impressively over the last five years.

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 ($) in millions 25,920 27,280 27,260 27,300 28,770
Diluted EPS ($) 1.18 1.31 1.27 1.50 1.20

Unfortunately, quarterly earnings have zigzagged. Revenue remained flat across the period from March 2012 through September 2012, with only a marginal improvement in the latest quarter. Moreover, EPS declined quarter-over-quarter…

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