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

February 24, 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 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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