Which of These 5 Pharma Stocks have the Strongest Earnings Trends?

March 03, 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 these 5 pharma stocks rank via earnings trends:

Jazz Pharmaceuticals, Inc. (NASDAQ:JAZZ): Current Price $58.41

Fiscal Year	2008	2009	2010	2011	2012
Revenue ($) in millions	67.51	128.45	173.78	272.28	585.98
Diluted EPS ($)	-7.19	-0.23	0.83	2.67	4.79

We note that 2010 marked a watershed in Jazz’ performance and that subsequently the company was able to dramatically improve its revenue and EPS. Smart acquisitions, of course, played a major role…

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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 ($) in millions	83.54	108.41	129.54	175.52	172.51
Diluted EPS ($)	0.79	0.48	0.45	0.55	3.31

We note that EPS rocketed north in the latest quarter and keep Jazz in focus in this analysis…

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