Which Top 5 Insurance 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 these top 5 insurance stocks rank via earnings trends:

American International Group, Inc. (NYSE:AIG): Current Price $38.45

Fiscal Year	2008	2009	2010	2011	2012
Revenue ($) in millions	-6,840	75,450	72,830	59,810	65,660
Diluted EPS ($)	-756.85	-90.48	14.98	11.01	2.04

AIG certainly weathered the financial storm as EPS moved solidly into the black in 2010. Unfortunately, EPS has been the declining alarmingly since then.

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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 ($) in millions	12,970	18,440	17,120	17,650	12,440
Diluted EPS ($)	11.80	1.71	1.33	1.13	-2.13

The last quarter in December 2012 shows a huge decline in the topline as well as EPS. We’ll keep our distance from this stock…

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