Earnings: It’s been a dirty word for the past several months, as companies across the country have been posting some ugly results and slashing estimates of future earnings. Standard & Poor’s is now projecting $54.70 in 2009 operating earnings per share for the S&P 500, and just $41.88 per share in as-reported earnings for the index’s components. By comparison, as recently as 2007, operating earnings for the S&P 500 were $82.54 per share, and as-reported earnings were $66.18 per share.

Given the bleak earnings climate, I thought it would be interesting to focus on a quality valued by several of the gurus I follow: earnings consistency, or earnings persistence. Many stock analysts use an earnings growth rate calculation to try to determine the future profit growth prospects for a company. But many of the gurus I follow were interested in looking at earnings persistence and consistency not only to calculate future profit growth, but also to gauge the financial stability of the firm. Many of the experts, including Warren Buffett, want a consistent stream of profits because this allows them to effectively value the business, without major year-to-year fluctuations skewing the earnings picture.

Which of the gurus used earnings persistence in their stock-picking methods? Here’s a list of some that did, and how earnings consistency factors into the strategies I base on their approaches:

• Warren Buffett — He likes companies to have solid, stable earnings that are continually expanding. This allows him to accurately predict future earnings. He wants to see 10 years of increasing earnings, though the strategy I base on his approach allows for one annual earnings per share dip in that time.
• Martin Zweig — Companies must show persistent yearly earnings growth. To fulfill this requirement a company’s EPS must increase in each year of the most recent five-year period.
• David Dreman — He wants companies to show a rising trend in the reported earnings for the most recent quarters. In my Dreman-based model, EPS in the latest quarter must be higher than it was in the previous quarter.
• John Neff — Neff likes companies to have persistent quarterly earnings. Earnings in each of the past 4 quarters should have increased from the corresponding quarters a year before, according to my Neff model.
• James O’Shaughnessy — To pass O’Shaughnessy’s Cornerstone Growth Strategy, firms must exhibit earnings increases in each year of the most recent five-year period.

My Guru Strategy computer models can do some pretty sophisticated calculations to assess a company’s earnings persistence. For example, the Buffett methodology I run on Validea seeks out firms that have steady, predictable earnings growth by first checking to see if any year’s EPS is negative in the past decade. If so, with one exception, it fails the Buffett-based predictability criterion. The exception is that earnings can be negative in the most recent fiscal year. If earnings were otherwise predictable but there is a loss or a sharp drop in earnings in the most recent fiscal year that he thinks is “temporary,” Buffett might see that as an opportunity (so in my model I do allow for a dip in earnings in the most recent year).

Here’s a look at five stocks whose earnings consistency has helped earn them approval from my models:

ExxonMobil Corporation (XOM): Energy giant passes my O’Shaughnessy Growth-based strategy, in part because its EPS have risen in each year of the past five-year period ($3.89, $5.72, $6.62, $7.28 and, most recently, $8.69).

ITT Educational Services (ESI): This Indiana-based post-secondary technology school earns high marks from my Buffett-based model. One reason: It has grown EPS in each year of the past decade (with EPS rising from $0.48 to $5.17 in that time).

Rio Tinto PLC (RTP): U.K.-based mining firm is one of only a handful of stocks that currently get approval from my Zweig-based approach, which likes that the company has grown EPS from $1.56 to $1.98 to $3.81 to $5.56 to $5.66 over the past five years.

Expeditors International of Washington (EXPD): My Buffett-based model also likes this global transportation firm, which has grown earnings in every year of the past decade, including 2008.

International Business Machines (IBM): The economy tanked, but this computer giant still upped earnings last year for the sixth time in a row. It gets approval from my O’Shaughnessy-based growth approach.