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Sunday, October 23, 2011

Earnings Growth Charts

I had 8 stocks from the earnings list reporting this week, I was going to post 5 charts but 6 of them were quite compelling, so I decided to post 6. In the top panel the red line is quarterly EPS growth rate, the black line is quarterly revenue growth rate. In the middle the red line is quarterly EPS, green quarterly revenue, black price, and blue price relative to SPX. There are no stocks reporting the end of a fiscal year so I did not include annual EPS. At the bottom the black bars are volume.

BMI is up first, and is a perfect illustration of what I have been seeing a lot of recently: a "head and shoulders" pattern in EPS and revenue. This barely recovered from the crash of 2008 and is in the process of giving those meager gains back. This is not in imminent danger of dropping off the list, but it's long term prospects probably are not good.

BWLD has been one of the leading stocks in the market recently. While EPS growth has slowed a bit, revenue growth is now quite high (exactly the opposite of the situation I saw about a year ago). This looks like it is in a base, and if EPS growth starts accelerating again, watch out.

ISRG would be a leader is it got more volume, but for some reason volume is in a long term decline. EPS and revenue growth are not spectacular, but are very steady, and this just recently broke out to a 5 year high. Expect volume to pick up if this continues to run rings around the market the way it has been recently.

NVEC is a bit of a conundrum: EPS and revenue growth have been slowing for over a year and went negative this quarter, but this just recently broke out of a long cup and handle pattern. It did pull back sharply on this last earnings report, so that breakout looks like it will fail.

SYNA reported a quarter of accelerating growth this quarter, which may have saved it from the next cut, but this one still has a serious problem: declining revenue. It has been stuck in a trading range for over two years now, and with these numbers I don;t ecpect it to break out any time soon.

TESS reported a quarter of decelerating growth, coming off a very good quarter last quarter. This seems to have spurts of high growth, but is pretty inconsistent. I don;t see this as a long term growth prospect, but does provide some good short term trading opportunities during those quarters it posts high growth.

The other two stocks, ESI and SCL, have incomplete revenue data, and both reported negative quarters. ESI is very unlikely to make the next cut, and SCL is borderline.

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