A few posts ago I mentioned that listening to earnings calls is a great way to learn more about or stay up to date with companies and/or industries that you are interested in. Today I came across this resource at TheStreet.com which is really useful. Runs through detail on preparation, process as well as what to look out for during the earnings call in a quantitative (on the balance sheet) as well as a qualitative (tone of management) sense.
- Preview the call - Listen to previous earnings call, note benchmarks & company metrics.
- Read the earnings release - Usually issued an hour before call, closely review benchmarks/metrics. Pay attention to future guidance and new announcements. Factor in or out one time items. Look at the balance sheet and focus on changes in financial position e.g. cash, short term investments, inventory, sales, diluted share count.
- Listen to the earnings call - Details in IR section of website. Usually Intro (US:”safe harbor disclosure), Welcome and Overview, Discussion of details, Q & A.
- Analyse the call - Look at info gained on call, in release, and previous and form an opinion. Be aware of GAAP vs non GAAP, tone of management and irrelevant metrics.
View full article by Scott Rothbort @ The Street here
Homework is to listen to an earnings call… so: