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2 Quick Points to Simplify Earnings Calls
Understand their purpose and what to listen for
An earnings call is a conference call hosted by a publicly traded company where the company, analyst, investors, and the media discuss the company’s financial report for a specific reporting period, such as the quarterly 10-Q report or the annual 10-K report. The following two points will further clarify the importance of earnings calls:
1. The Purpose of Earnings Calls
2. What to Listen for in Earnings Calls
1. The Purpose of Earnings Calls
The purpose of an earnings call is for a publicly traded company to discuss its most recent financial performance for a specific reporting period. Additionally, the purpose is for the company to discuss its future plans regarding its finances and business and answer questions from analysts, investors, and the media. Earnings calls are not legally mandated by the Securities and Exchange Commission. Still, it is an event that most publicly traded companies do to provide further context about their financial performance, what is to come, and answer any questions that anyone on the call may have.
2. What to Listen for in Earnings Calls
Important items to listen for in a company’s earnings call are earnings per share, revenue, risks, and plans. Additionally, it is important to listen to questions being asked by analysts, investors, and the media and the company’s answers to better understand how the company plans to go about its specific plans and improve its financial performance over time. One final item to pay attention to is the tone that the company’s management has when sharing details and answering questions. It will plays into helping you get a better understanding of how a company is performing from within regarding the confidence of its management.
When it comes to keeping up with when a company will have its earnings call, you can utilize Nasdaq’s Earnings Calendar to easily locate its next earnings call. To listen to a company’s earnings call live, you can utilize your preferred stock brokerage such as TD Ameritrade, E*Trade, or Robinhood. Additionally, some companies livestream their earnings calls on YouTube. In understanding earnings calls, you will further simplify staying up to date with companies you are currently invested in or are looking to invest in.
