Which Hot Auto Stock has the Strongest Earnings Trend Engine?

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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 auto stocks rank via earnings trends:

General Motors (NYSE:GM): Current Price $27.76

Fiscal Year 2008 2009 2010 2011
Revenue ($) in millions 148,980 104,590 135,590 150,280
Diluted EPS ($) -53.47 56.62 2.89 4.58

We’re impressed with the stellar growth seen in GM’s revenue and EPS during 2010 and 2011.

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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 ($) in millions 36,720 37,990 37,760 37,610 37,580
Diluted EPS ($) 1.03 0.24 0.60 0.90 0.89

Revenue however seems to have gone flat over the last five quarters, and EPS levelled off in the last two. We’ll drop GM because of the fall in its EPS in the latest quarter…

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