2. Earnings Per Share - The NASDAQ Dozen

The next fundamental factor in the NASDAQ Dozen is earnings per share (EPS). You will find the EPS information by clicking on the Revenue/EPS for WMT link under Fundamentals in the left menu of the quotes area (see Figure 4). For more information on earnings per share and revenue, visit Learning Markets.

Earnings Per Share
Figure 4—Revenue/EPS Link
Why We Look at Earnings per Share

If revenue tells us how much money is flowing into the company, EPS tells us how much of that money is flowing down to stock holders. EPS tells you how much money the company is making in profits per every outstanding share of stock. The higher the EPS is, the more money your shares of stock will be worth because investors are willing to pay more for higher profits.

How to Score Earnings per Share
  • Pass-Give EPS a passing score if the EPS are increasing. Start first by comparing the annual totals. But if the most recent fiscal year is incomplete, compare the most recent quarter with the same quarter in the previous year.
  • Fail-Give EPS a failing score if the EPS are decreasing

Looking at the EPS numbers for WMT in Figure 5, EPS should receive a passing score. Fiscal year 2011 had higher EPS than fiscal year 2010, but since fiscal year 2012 is incomplete, you also have to look at the most recent quarter. And as you can see, July 2012 EPS were higher than July 2011 EPS, which means you should give WMT a passing EPS score.

Earnings per Share: PASS

Earnings per Share: PASS WMT Earnings Per Share
Figure 5—Earnings per Share (EPS) Results


  All content in this article is supplied by Wade Hansen of Learning Markets. To learn more about their investor education offerings, please visit learningmarkets.com. Find more great articles from Learning Markets in our news sections.

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