Smart Investor has a useful story today on which blue chip stocks offer the best “earnings per share stability score”:
As you can see from the table, there are a couple of the 13 names that have had less than a decade of earnings experience – Carsales with eight and Corporate Travel Management with five – but we’ve decided to include them on the basis that they score highly and a record of five years is enough to get a handle on how reliable an earner a business is.
As alluded to above, the main criterion is the earnings per share stability score. The term measures how closely actual data tracks a linear trend line. A score of approaching one indicates the next period’s EPS is almost perfectly predictable based on past results. A stability score of zero suggests a company with an extremely volatile bottom line, which means yesterday’s earnings give no guidance to tomorrow’s.As a secondary insight, we also calculated the stability of operating income and dividends.
That’s not a bad looking list, actually…I’d swap out a couple of consumer discretionary stocks and CBA for dollar plays but otherwise pretty good.
