Earnings reports are made up of three main categories: the income statement, the cash flow statement, and the balance sheet. When you put these three statements together, you will gain insight into the company’s net income, expenses, sales, and, most importantly, earnings per share (EPS).
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Understanding earnings reports
Whether you are a beginner investor or you’ve been trading in the stock market for years, it can be helpful to know what earnings reports are and how you can access them.
Accessing a company’s quarterly earnings report can help you make informed decisions about buying, selling, or holding your shares.
This article will introduce you to earning reports and teach you how to access them.
All public companies are required to release their earnings reports every quarter.
This allows shareholders and future investors to obtain an exclusive look into their business and make decisions accordingly.
This is a mandatory step that companies must participate in to be listed on the stock exchange.
When Do Companies Release Earnings Reports?
After a quarter ends, a company has a total of 45 days to release its earnings reports. This period is known as earnings season.
Although companies can submit their reports at any time after the quarter ends, it typically takes a few weeks for earnings season to begin.
Here are the corresponding dates for each of the four quarters:
Q1 ends on March 31st. Companies have until mid-May to release first-quarter earnings reports.
Q2 ends on June 30th. Companies have until mid-August to release second-quarter earnings reports.
Q3 ends on September 30th. Companies have until mid-November to release third-quarter earnings reports.
Q4 ends on December 31st. Companies have until mid-February to release fourth-quarter earnings reports.
If you are curious about when a specific company is scheduled to report its quarterly results, you can head to an earnings calendar.
These can be found on plenty of investment sites, such as Nasdaq.
How To Access a Company’s Earnings Report
Accessing a company’s earnings reports is actually quite simple.
All you need to do is head over to the Securities and Exchange Commission’s website, SEC.gov. Here, you will find the SEC’s EDGAR search tool.
This tool allows you to search for financial reports from all publicly traded companies. All you need to do is type the company name into the search bar.
The SEC provides the public with the most complete and authoritative resource for all earnings reports. This resource has more than just quarterly earnings reports.
You can also access a company’s annual, 10-Q, and 10-K reports. If you want to do some research on a company before you decide whether or not it is a wise investment for you, this is where you can find all the information you need to know.
Where Else Can You Find Them?
Company Website: Visit the official website of the company you’re interested in. Many publicly traded companies publish their earnings reports in the “Investor Relations” or “Financials” section of their websites.
Financial News Websites: Check financial news websites such as CNBC, Bloomberg, Reuters, or Yahoo Finance. These platforms often provide updates on earnings reports, including summaries and analysis.
Stock Market Data Platforms: Utilize stock market data platforms like Nasdaq, NYSE, or Google Finance. These platforms offer information on earnings release dates and provide access to earnings reports.
SEC’s EDGAR Database: Access the Securities and Exchange Commission’s (SEC) Electronic Data Gathering, Analysis, and Retrieval (EDGAR) database at SEC.gov. You can search for a specific company’s filings, including earnings reports.
Earnings Calendar Websites: Visit earnings calendar websites like EarningsWhispers, Earnings.com, or Zacks Investment Research. These websites compile and provide information on upcoming and recently released earnings reports.
Brokerage Accounts: If you have an online brokerage account, your broker’s platform may offer access to earnings reports and related financial information for companies you’re interested in.
What Types of Earning Reports Matter?
Income Statement (Profit and Loss Statement): Provides a summary of a company’s revenues, expenses, and profits or losses over a specific period, typically a quarter or fiscal year.
Balance Sheet (Statement of Financial Position): Presents a snapshot of a company’s financial position at a specific point in time, showing its assets, liabilities, and shareholders’ equity.
Cash Flow Statement: Details the inflows and outflows of cash and cash equivalents during a given period, categorizing them into operating, investing, and financing activities.
Earnings Per Share (EPS) Report: Calculates and reports the earnings per share for a company, which is a key metric for assessing profitability on a per-share basis.
Quarterly Earnings Report: Typically released by publicly traded companies on a quarterly basis, providing a comprehensive overview of financial performance during the quarter.
Annual Report (10-K): A comprehensive report submitted annually to the Securities and Exchange Commission (SEC) in the United States. It includes audited financial statements, management’s discussion and analysis (MD&A), and other relevant information.
Interim Report (10-Q): Filed quarterly with the SEC by U.S. public companies, it offers a condensed update on the company’s financial performance compared to the previous quarter and the same quarter in the prior year.
Annual Shareholder Letter: Often written by a company’s CEO or management, this letter accompanies the annual report and provides insights into the company’s performance, strategy, and outlook.
Management Discussion and Analysis (MD&A): Part of the annual and quarterly reports, the MD&A provides an in-depth analysis of a company’s financial results, trends, risks, and future prospects.
Earnings Release: A concise summary of a company’s quarterly or annual financial results, typically distributed to the public and investors through press releases.
Proxy Statement (Definitive Proxy Statement or Form DEF 14A): Includes information about a company’s board of directors, executive compensation, and proposals for the annual shareholders’ meeting.
Sustainability or Corporate Social Responsibility (CSR) Report: Provides information on a company’s environmental, social, and governance (ESG) practices and initiatives.
Segment Reporting: Required for companies with multiple business segments, this report discloses financial information for each segment, allowing investors to assess the performance of individual business units.
Regulatory Filings (e.g., 8-K): Companies are required to file various reports with regulatory authorities such as the SEC, including significant event reports (e.g., mergers, acquisitions, changes in management) that can impact earnings.
Key takeaway
As you can see, earnings reports are easy to access and give you vital information about where to invest your money.
By researching and looking into a company’s earnings reports before you decide whether to buy, sell, or hold, you can analyze how the business models of the companies you’re primarily interested in work!
Key Highlights:
Components of Earnings Reports: Earnings reports consist of three main components: the income statement, cash flow statement, and balance sheet. These statements provide insights into a company’s net income, expenses, sales, and earnings per share (EPS).
Importance of Earnings Reports: Earnings reports are crucial for investors, whether beginners or experienced traders, as they offer valuable information for making informed decisions about buying, selling, or holding shares in a company.
Quarterly Reporting Requirement: Public companies are required to release earnings reports every quarter. This transparency allows shareholders and potential investors to gain an exclusive look into a company’s financial health and performance.
Earnings Season: After the end of each quarter, there is a 45-day period known as “earnings season” during which companies must release their earnings reports. The timing varies based on the quarter’s end date.
Quarterly Reporting Schedule:
Q1 ends on March 31st; reports due by mid-May.
Q2 ends on June 30th; reports due by mid-August.
Q3 ends on September 30th; reports due by mid-November.
Q4 ends on December 31st; reports due by mid-February.
Accessing Earnings Reports: Accessing a company’s earnings reports is straightforward. Investors can visit the Securities and Exchange Commission’s (SEC) website, SEC.gov, and use the EDGAR search tool to find financial reports from publicly traded companies by typing in the company name.
Comprehensive Information: The SEC’s resource includes not only quarterly earnings reports but also annual reports, 10-Q reports (quarterly reports), and 10-K reports (annual reports). This comprehensive information allows investors to conduct thorough research before making investment decisions.
Key Takeaway: Earnings reports are easily accessible and provide essential insights for investment decisions. By analyzing these reports, investors can gain a deeper understanding of a company’s financial performance and business model, aiding them in making wise investment choices.
The circle of competence describes a person’s natural competence in an area that matches their skills and abilities. Beyond this imaginary circle are skills and abilities that a person is naturally less competent at. The concept was popularised by Warren Buffett, who argued that investors should only invest in companies they know and understand. However, the circle of competence applies to any topic and indeed any individual.
Economic or market moats represent the long-term business defensibility. Or how long a business can retain its competitive advantage in the marketplace over the years. Warren Buffet who popularized the term “moat” referred to it as a share of mind, opposite to market share, as such it is the characteristic that all valuable brands have.
The Buffet Indicator is a measure of the total value of all publicly-traded stocks in a country divided by that country’s GDP. It’s a measure and ratio to evaluate whether a market is undervalued or overvalued. It’s one of Warren Buffet’s favorite measures as a warning that financial markets might be overvalued and riskier.
Venture capital is a form of investing skewed toward high-risk bets, that are likely to fail. Therefore venture capitalists look for higher returns. Indeed, venture capital is based on the power law, or the law for which a small number of bets will pay off big time for the larger numbers of low-return or investments that will go to zero. That is the whole premise of venture capital.
Foreign direct investment occurs when an individual or business purchases an interest of 10% or more in a company that operates in a different country. According to the International Monetary Fund (IMF), this percentage implies that the investor can influence or participate in the management of an enterprise. When the interest is less than 10%, on the other hand, the IMF simply defines it as a security that is part of a stock portfolio. Foreign direct investment (FDI), therefore, involves the purchase of an interest in a company by an entity that is located in another country.
Micro-investing is the process of investing small amounts of money regularly. The process of micro-investing involves small and sometimes irregular investments where the individual can set up recurring payments or invest a lump sum as cash becomes available.
Meme stocks are securities that go viral online and attract the attention of the younger generation of retail investors. Meme investing, therefore, is a bottom-up, community-driven approach to investing that positions itself as the antonym to Wall Street investing. Also, meme investing often looks at attractive opportunities with lower liquidity that might be easier to overtake, thus enabling wide speculation, as “meme investors” often look for disproportionate short-term returns.
Retail investing is the act of non-professional investors buying and selling securities for their own purposes. Retail investing has become popular with the rise of zero commissions digital platforms enabling anyone with small portfolio to trade.
Accredited investors are individuals or entities deemed sophisticated enough to purchase securities that are not bound by the laws that protect normal investors. These may encompass venture capital, angel investments, private equity funds, hedge funds, real estate investment funds, and specialty investment funds such as those related to cryptocurrency. Accredited investors, therefore, are individuals or entities permitted to invest in securities that are complex, opaque, loosely regulated, or otherwise unregistered with a financial authority.
Startup valuation describes a suite of methods used to value companies with little or no revenue. Therefore, startup valuation is the process of determining what a startup is worth. This value clarifies the company’s capacity to meet customer and investor expectations, achieve stated milestones, and use the new capital to grow.
Profit is the total income that a company generates from its operations. This includes money from sales, investments, and other income sources. In contrast, cash flow is the money that flows in and out of a company. This distinction is critical to understand as a profitable company might be short of cash and have liquidity crises.
Double-entry accounting is the foundation of modern financial accounting. It’s based on the accounting equation, where assets equal liabilities plus equity. That is the fundamental unit to build financial statements (balance sheet, income statement, and cash flow statement). The basic concept of double-entry is that a single transaction, to be recorded, will hit two accounts.
The purpose of the balance sheet is to report how the resources to run the operations of the business were acquired. The Balance Sheet helps to assess the financial risk of a business and the simplest way to describe it is given by the accounting equation (assets = liability + equity).
The income statement, together with the balance sheet and the cash flow statement is among the key financial statements to understand how companies perform at fundamental level. The income statement shows the revenues and costs for a period and whether the company runs at profit or loss (also called P&L statement).
The cash flow statement is the third main financial statement, together with income statement and the balance sheet. It helps to assess the liquidity of an organization by showing the cash balances coming from operations, investing and financing. The cash flow statement can be prepared with two separate methods: direct or indirect.
The capital structure shows how an organization financed its operations. Following the balance sheet structure, usually, assets of an organization can be built either by using equity or liability. Equity usually comprises endowment from shareholders and profit reserves. Where instead, liabilities can comprise either current (short-term debt) or non-current (long-term obligations).
Capital expenditure or capital expense represents the money spent toward things that can be classified as fixed asset, with a longer term value. As such they will be recorded under non-current assets, on the balance sheet, and they will be amortized over the years. The reduced value on the balance sheet is expensed through the profit and loss.
Financial statements help companies assess several aspects of the business, from profitability (income statement) to how assets are sourced (balance sheet), and cash inflows and outflows (cash flow statement). Financial statements are also mandatory to companies for tax purposes. They are also used by managers to assess the performance of the business.
Financial modeling involves the analysis of accounting, finance, and business data to predict future financial performance. Financial modeling is often used in valuation, which consists of estimating the value in dollar terms of a company based on several parameters. Some of the most common financial models comprise discounted cash flows, the M&A model, and the CCA model.
Business valuations involve a formal analysis of the key operational aspects of a business. A business valuation is an analysis used to determine the economic value of a business or company unit. It’s important to note that valuations are one part science and one part art. Analysts use professional judgment to consider the financial performance of a business with respect to local, national, or global economic conditions. They will also consider the total value of assets and liabilities, in addition to patented or proprietary technology.
The Weighted Average Cost of Capital can also be defined as the cost of capital. That’s a rate – net of the weight of the equity and debt the company holds – that assesses how much it cost to that firm to get capital in the form of equity, debt or both.
A financial option is a contract, defined as a derivative drawing its value on a set of underlying variables (perhaps the volatility of the stock underlying the option). It comprises two parties (option writer and option buyer). This contract offers the right of the option holder to purchase the underlying asset at an agreed price.
Gennaro is the creator of FourWeekMBA, which reached about four million business people, comprising C-level executives, investors, analysts, product managers, and aspiring digital entrepreneurs in 2022 alone | He is also Director of Sales for a high-tech scaleup in the AI Industry | In 2012, Gennaro earned an International MBA with emphasis on Corporate Finance and Business Strategy.
