Summary of the first points you should look at in US stock financial results
Reading financial statements from corner to corner is impractical for beginners or busy people. In order to efficiently understand financial results, here is a summary of the first points you should look at!
1. Expansion of revenue (sales)
Expanding revenue (sales) is proof of earning power. To determine the momentum of a company's growth, let's look at changes in earnings. It can be said that the higher the profit growth rate compared to other companies in the same industry, the greater the growth potential of that company. The products and services of companies with high revenue growth often have strengths that other companies in the same industry do not have.
2. See EPS for net profit growth!
Net profit is the profit that remains at the end after deducting all expenses from the money earned by a company. Whether or not net profit is growing is a point that should be viewed in conjunction with the expansion of earnings in order to evaluate corporate growth.
Additionally, it is important to compare net profit growth with revenue growth. If the growth rate of net profit exceeds the growth rate of earnings, it indicates that the profitability of the company is increasing, and it can be said that it is good news for investors.
Please look at EPS (net profit per share) in the financial bulletin.
The fact that net profit is shown as EPS may seem difficult for Japanese investors who are not used to settling US stocks. I recommend that you get used to it by looking at financial results summaries of major US companies for several quarters!
3. Comparison of actual results and analysts' predictions
Let's compare the actual results of earnings and EPS with analysts' predictions and see how much of a difference there was.Most financial bulletins are summarized in the form of actual results and predictions. Analysts make consensus predictions on earnings and net profit (EPS) of large companies prior to announcing financial results.
If earnings and EPS exceed consensus expectations, stock prices may rise in the short term due to favorable feedback from investors. Conversely, if actual figures fall short of expectations, there is a possibility that it will cause stock prices to fall.
It would also be a good idea to look at how the actual announced earnings changed compared to the same period last year.
4. Guidance vs. Analyst Predictions for the Next Term
Some companies may publish guidance (earnings forecasts) for the next quarter when announcing financial results.
If the guidance exceeds analysts' expectations, there is a possibility that stock prices will rise in the short term. Conversely, if guidance falls short of expectations, there is a possibility that it will cause stock prices to fall.
When it comes to short-term price movements, you should know that future expectations are more important than current performance.
Of earnings, EPS, and guidance, what is particularly important is guidance that guides future expectations.
Did you know that it's important to compare analysts' predictions with actual results?
One last thing. Please remember that the growth rate of earnings and net profit is actual figures, and there is a possibility that it was already factored into stock prices when financial results were announced.
Disclaimer: Moomoo Technologies Inc. is providing this content for information and educational use only.
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いぬ : I see. this is it! On top of that, it would be nice to look at the whole thing. I'm doing the opposite, myself.