Which Hot Auto Stock has the Strongest Earnings Trend Engine?

February 17, 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 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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