Part 18: Earnings Reports and Earnings Calls

Welcome back to The Apricot Investor’s Glossary! In this post, we’ll explore two key concepts for understanding a company’s financial performance: earnings reports and earnings calls. These are essential tools for investors looking to make informed decisions about stocks.

What is an Earnings Report?

An earnings report is a document released by a publicly traded company, typically every quarter, that details its financial performance over a specific period. Think of it as a company’s financial report card, showing how much money it made (or lost) and how it’s doing operationally.

Earnings reports include key metrics such as:

• Revenue | The total income from sales or services.
• Net Income | The company’s profit after expenses, taxes, and other costs.
• Earnings Per Share (EPS) | The portion of profit allocated to each share of stock.
• Other Financial Data | Details like operating margins, debt levels, or cash flow.

These reports are filed with regulatory bodies (like the SEC in the U.S.) and are publicly available. They provide a snapshot of a company’s financial health and are often compared to analyst expectations to gauge performance.

What is an Earnings Call? 

An earnings call is a conference call or webcast hosted by a company’s management (e.g., CEO or CFO) shortly after the earnings report is released. It’s a chance for the company to explain the numbers, share insights, and outline future plans.

During an earnings call, you might hear:

• Context for Results | Why the company performed the way it did (e.g., market conditions, new product launches).
• Forward-Looking Guidance | Management’s expectations for future revenue, expenses, or growth.
• Q&A Session | Analysts and sometimes investors ask questions about the report or strategy.

Earnings calls are often available as recordings or transcripts on a company’s investor relations website.

Why Are Earnings Reports and Calls Important?

• Performance Evaluation | The earnings report provides the numbers to assess whether a company is growing, profitable, or facing challenges. Comparing actual results to analyst estimates can influence stock prices.
• Management Insights | The earnings call offers context behind the numbers and clues about the company’s future plans..

Together, they help investors decide whether to buy, hold, or sell a stock. By understanding both the numbers and the story behind them, the investors are better equipped to make informed investment decisions.

It’s important to remember that investments are subject to market fluctuations and carry inherent risks. Consider your financial goals and risk tolerance before investing.

Apricot Capital is regulated by the Central Bank of Armenia.

The examples in this text are for illustrative purposes only. This does not constitute investment advice or a recommendation to buy or sell any specific investment instrument. The past performance mentioned in this text is not indicative of future results.