An earnings report is a publicly-traded company's report card on how it's fared financially over the last quarter. Learning how to read one is due diligence for investors.
Let's lend a hand on the financial knowledge front with a review on reading an earnings report, i.e. how to do it, what to look for, and some tips to maximize your learning experience.
Why earnings matter
Investors should place a high priority on company earnings reports.
That's because earnings reports reveal the ingredients needed to generate a company's profits, which usually leads to a higher stock price.
What to look for in earnings
Hone in on Revenue, Earnings per Share and Net Income
The very first thing to do is to determine the rate at which revenues, earnings per share (EPS), and net income have changed.
Have they grown or decreased from the same period a year ago? How do the growth rates for each line item compare to the other two?
Compare EPS to expectations
In any given quarter, about two-thirds of companies tracked by analysts beat the consensus earnings estimate. A miss should be explained by the company.
Do not neglect other metrics
Margins, free cash flow, and company-specific factors are also critical to investors.
Tips: How to use moomoo to find earnings
JD.com, China's e-commerce and retail giant, just released Q4 earnings. Let's use this company as an example.
Look for historical earnings?
1. Search for a company name/ticker on the main page.
2. Click on its link.
3. Click on the "Financial" tab at the top of the page.
4. Under the "Indicators" tab, you can find all important metrics in the earnings report.
5. Select the type of report, e.g. "annually" or "quarterly".
Look for earnings forecasts?
If you're still on the "Financials" page, scroll down a little bit. You will see the latest estimates of earnings in the "Financial Estimates" section.
Source: Forbes, TheStreet, Stockblocks, moomoo
