Quarterly Earnings Report

What is a 'Quarterly Earnings Report'

The quarterly earnings report is a quarterly filing made by public companies to report their performance. Earnings reports include items such as net income, earnings per share, earnings from continuing operations and net sales. By analyzing quarterly earnings reports, investors can begin to gauge the financial health of the company and determine whether it deserves their investment.

BREAKING DOWN 'Quarterly Earnings Report'

Fundamental analysts believe that good investments are identified with hard work in the form of ratio and performance analysis. One of the most important numbers for analysis is earnings-per-share, because it provides a ratio of the company's earnings compared to its shares outstanding. In other words, it compares earnings to market capitalization. While the number can be manipulated, it remains the holy grail of performance indicators.

The Importance of the Quarterly Earnings Report

Every quarter, analysts wait for the announcement of company earnings, and analysts then base buy-and-sell recommendations on this announcement. The announcement of earnings for a large capitalization stock can move the market, and stock prices can fluctuate wildly on days when the quarterly earnings report is released. The ability to provide accurate estimates can greatly advance an analyst's career; likewise, a bad estimate can ruin one. In fact, the ability to beat earnings estimates is more important than the company's ability to grow earnings over the prior year. For example, if the company grows earnings, but fails to meet analyst estimates, it may result in a sell-off of the stock. In many ways, analysts estimates are just as important as the earnings report itself.

Quarterly Earnings Report Summary

Quarterly earnings reports generally provide a quarterly update of all three financial statements, including the income statement, the balance sheet and the cash flow statement. However, the number that analysts wait for is earnings. Every quarterly earnings report provides investors with three things: an overview of sales, expenses, and net income for the most recent quarter. It may also provide a comparison to the previous year, and possibly to the previous quarter. Some quarterly earnings reports include a brief summary and analysis from the CEO or company spokesman, as well as a summary of previous quarterly earnings results.

The quarterly earnings report is generally backed up by the 10Q, a legal document that must be filed with the Securities and Exchange Commission every quarter. The 10Q is more comprehensive in nature and provides additional details behind the quarterly earnings report. The exact date and time of the quarterly earnings report announcement is obtainable by contacting an investor relations department. The 10Q is usually published a few weeks after the quarterly earnings report.

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