Which Teen Retailers are Winning the Earnings Game After This Big Week of Releases?

March 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 teen retailer stocks rank via earnings trends:

Hot Topic Inc. (NASDAQ:HOTT): Current Price $13.85

Fiscal Year	2009	2010	2011	2012	2013
Revenue ($) in millions	761.07	736.71	708.24	697.93	741.74
Diluted EPS ($)	0.45	0.27	-0.18	-0.04	0.46

Hot Topic has managed a nice turnaround in 2013. Turnover as well as EPS is back at last to 2009 levels.

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Next, our CHEAT SHEET investing framework asks us to drill down to the recent quarterly data:

Quarter	Jan. 31, 2012	Apr. 30, 2012	Jul. 31, 2012	Oct. 31, 2012	Jan. 31, 2013
Revenue ($) in millions	209.89	171.54	157.83	179.41	232.96
Diluted EPS ($)	0.20	0.09	-0.02	0.10	0.29

We also note the sharp improvement in turnover and profitability over the last two quarters, and like the stock for the comeback it has made…it therefore stays in the reckoning for this analysis.

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