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 link for CMG under Fundamentals in the left menu of the quotes area (see Figure 4).

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 CMG in Figure 5, EPS should receive a passing score. Fiscal year 2013 had higher EPS 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 EPS were higher than March 2013 EPS, which means you should give CMG a passing EPS score.

Earnings per Share: PASS

CMG 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.

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