Everything You Need to Know About Earnings
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Earnings are the most widely watched financial indicator because they represent the bottom line on profits. Companies that top earnings estimates (a positive surprise) tend to see their share prices rise, while companies that miss (a negative surprise) often see their shares sink. Earnings reports also drop significant clues about how a company is likely to fare financially in upcoming quarters and for the rest of the fiscal year.
If you keep track of earnings reports and estimates of companies you own, you'll understand a lot of what's propelling the stocks up and down. Earnings trends are also an essential research tool when you're sizing up potential purchases.
How do you keep track of it all? Kiplinger.com has just launched its earnings center. It's provided by First Call/Thomson Financial, which tracks company earnings and surveys analysts to come up with consensus estimates. Here you'll find everything you need to track earnings announcements and trends, analyst ratings, even earnings surprises and how stocks performed after those surprises.
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Who's reporting profits?
Click on "Announcements" for lists of all companies that reported earnings in the past 30 days. Double-click on a date and you'll get a display of ticker symbols, actual earnings, estimated earnings, surprise dollar amount and percent, and the stock's average return over one and three months.
Tickers are arranged by actual earnings, but you can re-sort the data by double-clicking on the category headers. For instance, if you wanted to view the top-performing stocks over the past three months, double-click on "3-Month" and you'll get a list of companies that reported earnings on the date you selected, ranked by their three-month performance.
Use the "Calendar" to see which companies are expected to post earnings within the next five business days. If there are hyperlinked numerals below the calendar box, that means there are more companies to be displayed.
What's the trend?
It's true that Wall Street pins a lot on the profits (or lack thereof) that a company posts each quarter. But whether that number meets analysts' estimates, exceeds them, or falls short doesn't tell you the whole story. Sometimes the trend in what analysts expect a company to earn is more important than the number the company just reported. Stocks of companies whose earnings estimates are revised upward typically outperform stocks of companies whose earnings are geared downward.
For a list of companies who have had their estimates revised up or down over the past week, see the "Recommendation Changes section.
How are my stocks doing?
The "Earnings Estimates" page gives you the latest earnings figures and consensus estimates, analyst ratings, even projected long-term growth rates, for just about any company you want to check up on -- no matter when it's scheduled to report.
In the quote box, enter Johnson & Johnson's stock symbol, JNJ, and you'll see that analysts feel "positive" about this stock, according to the overall trend of their earnings revisions (plus a host of other factors cranked into a "quantitative company scoring model"). The consensus stock rating for JNJ is a "hold."
Scroll down to the bar graph of earnings over the past four quarters and a quick glance tells you JNJ met or surpassed estimates every time. The next table shows you how the consensus earnings estimate breaks down among individual analysts, how many analysts follow the stock and, finally, their average long-term growth projection -- in JNJ's case, it's around 14%.
The final table is earnings momentum -- a snapshot of the trend in analysts' estimates.
What else can I do?
If you want to dig a little deeper, click on the "Peer and Industry Comparisons" link located near the top of the page. Here a colorful bar chart shows you how JNJ stacks up, earnings-wise, against its major industry competitors. Data are there for the current quarter, next quarter, current fiscal year and next fiscal year.
You can also see whether shares of JNJ really did go up after it beat Wall Street's estimates by clicking on "Performance Following a Surprise." In this case, it looks like the stock rose in more than half of the three-month periods following a positive surprise.
When you're in the earnings center, you can click on a hyperlinked stock symbol as a shortcut to the "Earnings Estimates" section we just walked you through.
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