Quarterly Earnings – Look Beyond the numbers
Quarterly Results or Quarterly Earnings are the terms known to all the stock market participants – be it retail investors, traders, institutional investors, analysts. What are Quarterly Earnings and Why are Quarterly Earnings so important?
All of us are familiar with the term ‘exams’ that we had in our schools. The first term, mid-term and final term exams were the barometer of our academic performances. Those examinations and the results therein took us through the SWOT Analysis of our academics, the areas of improvement, strength and are we eligible to proceed with the next level of academics?
In stock markets, as we are all aware, its not just about investors, but there are various participants who make stock markets what they are like analysts, institutional investors, FIIs, DIIs, Asset Management Companies, etc. These participants track stock markets and stocks regularly – the company’s fundamentals, valuations, revenue model, revenue streams, profit, cost-efficiency, long-term vision, growth aspects, the global and domestic competitiveness, micro and macro, global, geopolitical and economic and political environment.
Quarterly Earnings are a sneak-peek into the company’s performance Quarter-on-Quarter (QoQ) and Year-on-Year (YoY). Quarterly Earnings forms a part of Fundamental Research. There are various parameters on which a company is tested in their Quarterly Earnings declaration such as;
- Revenue from Operations Growth /Sales Growth,
- Profit After Tax Growth,
- Profit After Tax Margin,
- Exceptional Profit or Loss
- Interim Dividends or Special Dividends declared by the company if any
- Bonus or Splits declared by the company
- The Limited Review Report by the Auditors
- Investor Presentations
- Management Outlook or Management Commentary
- Increase or Decrease in Promoters’ Holding
- Conference Calls – Management Views viz-a-viz analyst and investor views
Quarterly Earnings indicators:
- Q1 – First Quarter of the Financial Year
- Q2 – Second Quarter of the Financial Year
- Q3 – Third Quarter of the Financial Year
- Q4 – Fourth Quarter of the Financial Year
Through Quarterly Earnings statements, it is easy to know how the companies have taken care of changing govt. policies, business environments, various micro and macro-economic parameters. Their vision for growth, management of crisis that the company, sector or the economy might have undergone during the past quarters, further expansion plans for future and related provisions.
Just as our school and college result systems, in corporates too, there are these quarterly earnings season to gauge the areas of strength and improvements for the companies either invested in or wish to invest in.
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