How to read an earnings report

Public US companies report results every quarter. An earnings report tells you what the business sold, what it kept as profit, and what management expects next. This guide walks through the parts in the order most readers check them.

Where earnings reports come from

• Press release (often filed as an 8-K). The headline numbers, usually released before the market opens or after it closes.
• Form 10-Q. The full quarterly report filed with the SEC, with unaudited financial statements and notes. The fourth quarter is covered by the annual 10-K, which is audited.
• Earnings call. Management discusses results and answers analyst questions. Many companies post a transcript or recording on their investor relations site.

The numbers to read first

1. Revenue (sales): money brought in from customers. Compare it with the same quarter a year earlier, because many businesses are seasonal.
2. Net income: profit after all expenses, interest, and taxes.
3. Earnings per share (EPS): net income divided by the number of shares. Reports often show GAAP EPS and an adjusted (non-GAAP) EPS; the company must explain the difference in a reconciliation table.
4. Margins: gross margin and operating margin show how much of each dollar of revenue is left after costs.
5. Cash flow: operating cash flow and free cash flow show whether profit turns into cash.
6. Guidance: management’s outlook for the next quarter or year, if the company gives one.

Estimates versus results

Analysts publish estimates for revenue and EPS before a report. A “beat” or “miss” only describes how results compared with those estimates. A stock can fall after a beat or rise after a miss, often because of guidance or details in the report. StockScroll’s Earnings tab shows upcoming report dates and consensus EPS estimates when the live feed returns them.

A simple reading checklist

• Read the press release, then skim the 10-Q or 10-K for the full statements and notes.
• Compare each number with the same period last year, not only the previous quarter.
• Read the reconciliation if the company highlights adjusted figures.
• Note any change in guidance and the reasons management gives.
• Look for new or expanded risk factors.

Find filings on SEC filings lookup and follow the full workflow in how to research a stock.

Educational only. This article explains general concepts. It is not investment, tax, or legal advice and is not a recommendation to buy or sell any security. Check primary sources such as SEC.gov before making decisions.

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