If I have a number of stock shares and that company reports earnings of X amount per share, do I receive those earnings?

By Investopedia Staff AAA
A:

Simply?

Yes and no.

Part of the answer to your question is "no" because when a company reports $X of earnings per share in a quarter, the company is not declaring a dividend to its investors - it is publicizing how profitable it was for the last quarter. If it reported a losing quarter (negative EPS), the company naturally wouldn't request that you pay it back some money. Similarly, it won't pay you when it reports a profitable quarter. The only time you receive money directly from the company is through a dividend. (To learn more about dividends, see How And Why Do Companies Pay Dividends?)

Also, part of the answer to your question is "yes" because a company's stock performance is determined by different factors such as supply and demand, investor perception and market sentiment - which are, at least in part, affected by earnings. For this reason, when a company reports a certain amount of earnings per quarter, the stocks that you already own should have risen for the increase in earnings (according to the efficient market hypothesis). In other words, a company reporting higher earnings means that it is now worth more, which means the market will realize the higher value in the price of the stock, indirectly increasing your stock's worth.

For more on earnings, see our article Everything You Need To Know About Earnings.

RELATED FAQS

  1. Why do share prices fall after a company has a secondary offering?

    The best way to answer this question is to provide a simple illustration of what happens when a company increases the number ...
  2. Why do stock prices change following news reports?

    Stock prices move up and down every minute due to fluctuations in supply and demand. If more people want to buy a particular ...
  3. How do I calculate the adjusted closing price for a stock?

    When trading is done for the day on a recognized exchange, all stocks are priced at close. The price that is quoted at the ...
  4. How do I find historical prices for stocks?

    Whether for research purposes, bookkeeping or even general interest in historical performance, this is a question that many ...
RELATED TERMS
  1. Bid Wanted

    An announcement by an investor who holds a security that he or ...
  2. Hindsight Bias

    A psychological phenomenon in which past events seem to be more ...
  3. Paper Trade

    Using simulated trading to practice buying and selling securities ...
  4. Financial Exposure

    The amount that one stands to lose in an investment. For example, ...
  5. Bid And Asked

    A two-way price quotation that indicates the best price at which ...
  6. Compound Net Annual Rate - CNAR

    The return on an investment after taking tax implications into ...
comments powered by Disqus
Related Articles
  1. Can Good News Be A Signal To Sell?
    Fundamental Analysis

    Can Good News Be A Signal To Sell?

  2. 7 Steps To A Successful Investment Journey
    Entrepreneurship

    7 Steps To A Successful Investment Journey

  3. Introduction To Asian Financial Markets
    Economics

    Introduction To Asian Financial Markets

  4. 5 Statements Commonly Made By Amateur ...
    Investing Basics

    5 Statements Commonly Made By Amateur ...

  5. 6 Dangerous Moves For First-Time Investors
    Fundamental Analysis

    6 Dangerous Moves For First-Time Investors

Trading Center