CANSLIM Criteria: C - The importance of quarterly earnings

With all my talk about the CANSLIM method I thought it would be a good idea to write about each of its criteria to give you guys a general idea of how it works. Here is the first of 7 entries.

The method emphasizes earnings as they are a clear judge of a company’s performance. A company must have quarterly earnings at least 25% higher than the same quarter last year. You want to see quarterly earnings increases in the past few quarters as well, not just the most recent quarter. Then you want to look forward to future earnings You do this by looking at analyst’s projections for the next quarter. These should be up 25%. Then last you want to see an increase in the rate of quarterly earnings increases. For instance a 30% increase 3 quarters ago, a 40% increase to quarters ago and a 50% increase in the current quarter.

For a more in depth look at the CANSLIM method check out a review on it here.

How to Pick Stocks with CANSLIM