News Digest / Analysis & Ideas / What Is an Earnings Report?

What Is an Earnings Report?
07:08am, Tuesday, Feb 22, 2022

An earnings report is usually issued quarterly (Q1, Q2, Q3 & Q4) by public companies to report their performance. It typically includes NET income, Earnings Per Share, earnings from continuing operations, and NET sales. Looking at the earnings report, investors can start to gauge the company's financial health and make even better decisions whether to buy, sell, or stay in the company.

Fundamental analysts and value investors will typically hunt for stocks that continue to show good financial ratios and use a decline as an exit point. One of the most anticipated numbers for analysis is Earnings Per Share because it indicates how much the company earned for its shareholders. The report will also indicate a possible dividend.

Earnings Report Content.

Earnings reports generally update all three financial statements, including the income statement, the balance sheet, and the cash flow statement. These figures are typically measured against previous quarters/years. Furthermore, the earnings report usually includes a summary and analysis from the CEO or company spokesman, alongside a more general view of the financials and future forecast.

What To Know About Earnings Reports.

Announcement of earnings for a stock, particularly for well followed large-capitalization stocks, can move the market. Stock prices can fluctuate wildly on days when the quarterly earnings report is released. Despite good reports, stocks may fall if the investors were expecting more or believe the next quarter will not be as good. Investors always try to be ahead of the market, and future earnings/losses are often discounted into the stock's current price. It is natural for stocks to start to move in either direction a few days before releasing an earnings report.


In simple words, Earning Reports show how the business is doing. They also have to give a future statement. Before the Earnings Reports, the stock price is based on expectations and guessing.

Quarter results, therefore, typically re-adjust prices, which means if they don't hit the target, stock drops. So the Earnings Reports day is a guaranteed day of movement. And it is essential to follow the company history to predict will it go up or down.

Our Earnings Reports page tries to give you information on how the stock typically behaves before, at, and after earnings day. Like this for Google:

Above you can see how Alphabet Inc. (GOOG) performed four days prior and four days after releasing the earnings report.

Stay tuned to know more!

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