While we may be officially into Week 3 of earnings season, the real fun is only getting started as FAANG (or FATMAN, if you prefer) show us their books.
However, there’s a lot to unwrap with all of these quarterly reports…
What investors need to know!
We don’t have all day, so we’re gonna’ keep things simple. If you really want to get stuck into a company’s earnings reports, here are the main things you should look out for:
Revenue — also known as the ‘top line’ of a company’s earnings — is the total amount of money earned by a company in the last quarter. Revenue gives the broadest sense of how a company has performed over the past three months and gives the investor a good benchmark of the inward flow of cash.
Earnings, profit, net income, the ‘bottom line’. Whatever name you give it, the earnings figure is arguably the most important metric released in a quarterly report as it is the overall amount of money a business has made in the last quarter, after expenses and tax.
- Earnings per share
The EPS shows how much profit the company earned on every single share they offer. This makes it a useful metric for investors as it shows them the specific impact of a company’s profit in terms of each share you own.
This is a more obvious, but very important, stat to look for. Basically, guidance is what the company expects to achieve in the next quarter. It gives investors a clear picture of how well (or not) the company believes it will do, though not all companies offer guidance.
- The best of the rest
Some more terms that might crop up include analyst estimates (what the analysts covering the stock think will happen), year-over-year comparisons (how well it’s doing compared to the same quarter last year), same-store-sales (similar to year-over-year but for companies that operate physical stores), bookings (money that customers have committed to spending), and many more.
If you want to learn more about the things to look out for in a quarterly report, check out our Earnings Season Cheat Sheet.
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MyWallSt operates a full disclosure policy. MyWallSt staff currently holds long positions in companies mentioned above. Read our full disclosure policy here.
Editor at MyWallSt
Jamie is the Content Editor here at MyWallSt. His favorite stock is Apple, which is also the first stock he ever bought. Jamie is not only a big fan of its products, but he believes that the tech giant has a whole lot more to give the world, and hasn't even scraped the surface of its potential.