Which Top 5 Discount Retailer Stocks Have the Strongest Earnings Trends?

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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 five discount retailer stocks rank via earnings trends:

Target Corp. (NYSE:TGT): Current Price $63.60

Fiscal Year 2008 2009 2010 2011 2012
Revenue ($) in millions 63,370 64,950 65,360 67,390 69,860
Diluted EPS ($) 3.33 2.86 3.30 4.00 4.28

Target has grown its topline and EPS nicely between 2009 and 2012.

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

Quarter Oct. 31, 2011 Jan. 31, 2012 Apr. 30, 2012 Jul. 31, 2012 Oct. 31, 2012
Revenue ($) in millions 16,400 21,290 16,870 16,780 16,930
Diluted EPS ($) 0.82 1.44 1.04 1.06 0.96

We don’t like that revenue has been flat across the last three quarters, and EPS is down in the last one. We’ll look elsewhere for better candidates…

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