1. Revenue - The Nasdaq Dozen

We start the Nasdaq dozen with an analysis of revenue because at its basic level, stock growth starts with a company making money. Fundamentally, if a company isn't bringing in any money, it can't pass profits along to its shareholders. In other words, it all starts with revenue.

Why We Look at Revenue
Revenue will give you an idea of how much money the company is making. If revenue is consistently increasing, this means the company is growing. As the company continues to grow, the stock price will appreciate in value.

How to Score Revenue

  • Pass: Give revenue a passing score if revenue is 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 revenue a failing score if revenue is decreasing

Looking at the revenue totals for CMG in Figure 3, it should receive a passing score. Fiscal year 2013 had a higher revenue than fiscal year 2012, but since fiscal year 2014 is incomplete, you also have to look at the most recent quarter. And as you can see, March 2014 revenue was higher than March 2013 revenue, which gives CMG a passing revenue score.

Revenue: PASS

CMG Revenue & Earnings Per Share (EPS)
Figure 3: Revenue 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.

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