Earnings Announcement

The bread and butter of corporate communication. Every quarter, public companies need to release their financial results. This report lets investors (and potential investors in the general public) know how the company performed during the three-month period. When this information comes out, it's known as an earnings announcement.

These announcements are important events on the stock-trading calendar. Anyone interested in the stock eagerly awaits the report, and the results often drive trading in that firm's stock. The stats can spark dramatic moves immediately after the release, and/or set the tone for trading over the coming weeks and months.

Large companies have analysts who follow the business and issue predictions about what the company will say. They predict how much profit the company will report (usually in the form of earnings per share, or EPS), as well as provide estimates for other measures. Revenue is usually included, but estimates can also come for things like gross margin, EBITDA, and more esoteric items, such as subscriber numbers.

If a company beats expectations, its stock has a good chance of going up following the earnings announcement (assuming other conditions are right). If the company misses expectations, the stock will likely decline.

Earnings announcements offer the company a chance to communicate other things to investors as well. The firm will often include predictions for its future results (known as guidance). It might also include other announcements, like a new stock buyback or dividend. Many companies supplement their formal earnings announcement with a conference call or online presentation, giving investors and analysts additional details not included in the published statement.