Earnings analysis
Question
What did the latest reporting period actually say about the business, and what changed?
Inputs
| Input | Source |
|---|---|
| Press release | Investor relations site, news wire |
| Filed statements | Quarterly or annual filings |
| Earnings call transcript | Investor relations site, transcript provider |
| Prior-period results | Filings, prior models |
| Consensus estimates | Sell-side consensus, internal model |
| Management guidance, prior and current | Earnings calls and filings |
| Peer commentary | Same quarter peer reports if available |
The point is what changed — actual against consensus, current against prior, guidance against prior guidance.
Procedure
- Read the press release. Headline revenue, profit, earnings per share. Year-over-year and quarter-over-quarter. Note segments, geographies, currency effects.
- Compare against consensus. Beat, in line, miss. By how much. Reaction matters more than the absolute number — the surprise is what moves the stock.
- Compare against the prior model. Where did the model disagree with reality? Margin, growth, capital expenditure. Each disagreement is a calibration signal.
- Read the filing. Segment detail, working capital, capital expenditure, share count, debt. The footnotes carry the surprises the press release smoothed over.
- Listen to the call. Prepared remarks first — that is the story management wants told. Then the question-and-answer — that is where the analysts find what the prepared remarks left out. Tag every forward-looking comment.
- Update guidance. Revenue range, margin range, capital expenditure, share repurchase, earnings per share. Compare current guidance to prior. The delta is the headline.
- Update the model. Roll forward the historical period. Adjust forward assumptions based on what the call revealed. Note every change with a source comment.
- Write the note. Headline result. Surprise versus consensus. Three things that moved. Updated estimates. Updated thesis. The note is for a reader who did not listen to the call.
Gates
- Comparison is against the wrong consensus snapshot (stale or pre-revision)
- Currency effects are not separated from organic growth
- One-time items are buried in the headline (always show like-for-like)
- The model update is not source-stamped with the call date
- The note's headline disagrees with the data in the table underneath it
Output
A short note (one or two pages) for an investor or internal reader. Headline at top. Three movers underneath. Updated estimates in a table. A line on thesis change or no change. The note stages for editorial review before it ships.
Common Mistakes
- Reading the press release and skipping the filing — the filing has the substance
- Quoting the call without sourcing the quote to a section of the transcript
- Confusing reported growth with organic growth (currency, M&A, divestitures all matter)
- Updating only the next quarter and leaving the out-years stale
- Writing the headline before reading the call — the headline reveals the bias
Adjacent Methods
- Discounted cash flow — updates plug into the projection
- Three-statement model — the engine that absorbs the new period
- Investment committee memo — the wrapper if the thesis changed
Questions
What changed most — the result, the guidance, or the thesis?
- Am I comparing against the right consensus snapshot, not a stale one?
- Have I separated reported growth from organic growth?