DEFINITION of 'Earnings'

The amount of profit that a company produces during a specific period, which is usually defined as a quarter (three calendar months) or a year. Earnings typically refer to after-tax net income.Ultimately, a business's earnings are the main determinant of its share price, because earnings and the circumstances relating to them can indicate whether the business will be profitable and successful in the long run.


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Earnings are perhaps the single most studied number in a company's financial statements because they show a company's profitability. A business's quarterly and annual earnings are typically compared to analyst estimates and guidance provided by the business itself. In most situations, when earnings do not meet either of those estimates, a business's stock price will tend to drop. On the other hand, when actual earnings beat estimates by a significant amount, the share price will likely surge.

  1. Earnings Per Share - EPS

    The portion of a company's profit allocated to each outstanding ...
  2. Earnings Announcement

    An official public statement of a company's profitability for ...
  3. Close Period

    The time period between the completion of a listed company's ...
  4. Earnings Estimate

    An analyst's estimate for a company's future quarterly or annual ...
  5. Earnings Surprise

    Occurs when a company's reported quarterly or annual profits ...
  6. EBITDA - Earnings Before Interest, ...

    Learn what EBITDA is, watch a short video to learn more and with ...
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    The payout ratio is most relevant for investments that pay out dividends to shareholders. The payout ratio indicates the ... Read Full Answer >>
  6. What are the main factors that drive share prices in the electronics sector?

    The main factors that drive share prices in the electronics sector are the economy, new technology, bookings and earnings. ... Read Full Answer >>
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  8. How does additional equity financing affect existing shareholders?

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  9. How do traders interpret breakaway gaps on a security?

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  10. Why would my stock's value decline despite good news being released?

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  11. Stocks with high P/E ratios can be overpriced. Is a stock with a lower P/E always ...

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