Reading a Company
Intermediate4 Min Read
Earnings Reports: What to Read, How
The book opens once a quarter — and the market really only reads three lines.
Public companies answer for themselves every three months. The release is commonly called "the earnings report"; technically it is the full set of quarterly results, not just one financial statement.
The Three Lines the Market Reads
1. Revenue. Total sales. It is independent of margins and accounting choices, which makes it the hardest number to dress up. Its growth rate is compared with the same quarter a year earlier.
2. EPS (earnings per share). Net income divided by the share count — what one share earned in the period.
3. Guidance. The company's forecast for what comes next. On most days this is the one that matters. A great quarter with weak guidance sells off hard; the reverse happens too.
The Four Possibilities
| Revenue | EPS | Typical reaction |
|---|---|---|
| Beat | Beat | All eyes on guidance |
| Miss | Beat | Bad — the profit may be cost-cutting |
| Beat | Miss | A margin problem — questioned |
| Miss | Miss | Hard selloff |
The second row surprises people: companies that beat on EPS but miss on revenue often get sold. The reason — cost-cutting has a floor, sales growth doesn't.
When They Report
| Timing | Code | Meaning |
|---|---|---|
| Before the open | BMO (before market open) | Pre-session, usually 7:00–9:00 New York |
| After the close | AMC (after market close) | Post-session, usually 16:05–16:30 New York |
Most large companies prefer after the close: let the news be digested while the market is shut, hold the call, and let the price form by morning. That is why an earnings reaction usually appears at the next day's open — and sits on the intraday chart as a large gap.
The Three Statements
The full report contains three statements, each answering a different question:
| Statement | The question it answers |
|---|---|
| Income statement | What did it earn this period? |
| Balance sheet | What does it own and owe today? |
| Cash flow statement | How much money actually entered the till? |
The third is the least read and the hardest to dress up. Profit is computed under accounting rules; cash flow is money that actually moved. A company whose profit grows while its cash flow weakens usually gives its first warning right there. More: Reading Cash Flow
Where You'll See It on This Site
- The [Earnings](/bilancolar) screen: a day-by-day calendar tagged before-the-open / after-the-close. Cards show the revenue estimate, the EPS estimate and the company's market cap together — a number means little without knowing the size of the company behind it.
- Stock page → Past Earnings: reported EPS next to expected, with the surprise computed.
- Today's Flow: companies reporting today, on the same time axis as the economic releases.