Using earnings
Earnings are like quarterly report cards for companies. During earnings, companies make a public announcement about their profits or losses, and give guidance on what to expect in the future.
Companies typically make earnings announcements in a press release, in a conference call (that you can listen to on Robinhood), or in an official filing with the US Securities and Exchange Commision (SEC) (10-Q).
It’s a good idea to pay attention to earnings calls because they’re one of the few times you can hear a company’s CEO share how their company is performing.
If the earnings call gives people confidence in a company, stock prices often go up. If people lose confidence in a company’s performance, stock prices typically go down.
Checking if a company’s stock price goes up or down after earnings is a great gut check to see how well the market believes a company is doing.
You can find a company’s most recent earnings in the Earnings section of its stock detail page. The detail page also shows the amount of profit a company made in the most recent quarters in terms of earnings per share (EPS) along with their next earnings announcement date.
EPS, or earnings per share, is a dollar amount that represents the company’s overall quarterly profits divided by the number of shares in the market. This shows you the amount of profit the company made for each share of stock it has in the market.
Let’s say MEOW has 1 million shares in the market and just announced $10 million in revenue, their EPS would be $10.
Many investors use EPS to better understand a company’s profitability and ability to meet profit goals. When profits are higher, it may indicate that the value of the company’s shares will increase. The opposite is true for when a company’s profits are down.
You can find them in the Earnings section of the stock’s detail page:
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