How to read earnings report like a pro

If you’ve ever looked at an earnings report and felt lost, you’re not alone. But once you know what to look for, these reports become a powerful tool in your investing toolbox.

why earnings matter

Earnings reports show a company’s financial health. They reveal performance, risks, and future outlook.

key things to focus on

  1. Revenue and earnings per share (EPS): Are they growing? Beating estimates?
  2. Forward guidance: Is the company optimistic or cautious about the future?
  3. Margins and costs: Are profits being squeezed by inflation or supply issues?
  4. Cash flow: Is the business generating actual cash or just paper profits?

real-world example: fedex and nike

Both recently reported weak guidance. Their cautious tone spooked investors even more than their missed numbers.

how to build confidence reading reports

  • Start with summary headlines and investor call transcripts
  • Use comparison sites like Yahoo Finance or Seeking Alpha
  • Practice with companies you know and follow

You don’t need to be an analyst to use earnings reports. A few key metrics go a long way.

Read more