Which of These 5 Healthcare Stocks Has the Strongest Earnings Trends?
January 31, 2013
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 these top 5 healthcare stocks rank via earnings trends:
Johnson & Johnson (NYSE:JNJ): Current Price $73.99
| Fiscal Year | 2008 | 2009 | 2010 | 2011 | 2012 |
| Revenue ($) in millions | 63,750 | 61,900 | 61,590 | 65,030 | 67,220 |
| Diluted EPS ($) | 4.57 | 4.40 | 4.78 | 3.49 | 3.86 |
Johnson & Johnson reported an improvement in revenues in 2011 and 2012. EPS declined sharply in 2011, but improved somewhat in 2012.
Next, our CHEAT SHEET investing framework asks us to drill down to the recent quarterly data:
| Quarter | Dec. 31, 2011 | Mar. 31, 2012 | Jun. 30, 2012 | Sep. 30, 2012 | Dec. 31, 2012 |
| Revenue ($) in millions | 16,260 | 16,140 | 16,480 | 17,050 | 17,560 |
| Diluted EPS ($) | 0.09 | 1.41 | 0.50 | 1.05 | 0.91 |
Revenue has grown nicely over the last three quarters of the review, though EPS has been somewhat erratic, and fell off in the latest quarter. We need to look for better stocks in the sector…
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