1.7 US Earnings Explained: Reports, Guidance & Market Expectations
Earnings season's documents, a practical order for reading results, and why a beat can still fall.
About this lecture
How can a company report strong profit growth and still see its stock fall that night? Earnings reactions depend on more than the headline—they also reflect guidance and what investors already expected.
In this lecture, Pratham walks through the US earnings season, the documents companies publish, and a practical order for reading the results.
You'll learn about:
- The quarterly earnings calendar and where to find reporting dates
- Earnings releases, 8-Ks, earnings calls, 10-Qs and 10-Ks
- GAAP versus adjusted earnings
- Revenue, margins, earnings per share and free cash flow
- Comparing results with last year, analyst estimates and previous guidance
- Raised, maintained and cut guidance—and why the outlook matters
- Consensus estimates, whisper numbers and the options-implied move
- A before-and-after-release checklist, including the analyst Q&A
The goal is to look beyond “beat” or “miss” and understand how the results change expectations for the business.
Watch lecture 1.4 on the Fed for the earlier discussion of expectations, surprise and the future path.
Educational content only. Not investment advice.
MochaLearn is a free A to Z course on understanding and trading US stocks and commodities, built for Indian traders.
Key takeaways
- A stock reacts to earnings against what investors already expected and to the guidance that comes with them, not to the headline profit figure alone.
- The documents are the earnings release and 8-K, the call, and the 10-Q or 10-K; GAAP and adjusted earnings are different numbers.
- Read revenue, margins, earnings per share and free cash flow against last year, analyst estimates and previous guidance; raised, maintained or cut guidance is what changes the outlook.
- Consensus estimates, whisper numbers and the options-implied move say what the market expects before the release; the analyst Q&A on the call often says more than the prepared remarks.
Terms in this lecture
- 10-K and 10-QA 10-K is the audited annual report a US listed company files with the SEC; a 10-Q is the unaudited quarterly version.…
- 8-KAn 8-K is the filing a US company must make within four business days of a material event: a merger, a CEO leaving, a…
- Blue chip US stocksBlue chip US stocks are large, long-established, profitable American companies like Apple, JPMorgan or Johnson &…
- Bull and bear marketA bull market is a sustained rise in prices; a bear market is a fall of 20% or more from a recent high, the convention…
- BuybackA buyback is a company buying its own shares and cancelling them, so the same profit is spread over fewer shares and…
- Consensus estimateThe consensus estimate is the average analyst forecast for a company's earnings or an economic number. Markets price…
- Dividend aristocratsDividend aristocrats are S&P 500 companies that have raised their dividend every year for at least twenty five years…
- Dividend ETFA dividend ETF holds stocks picked for high or steadily rising dividends, such as SCHD or VYM. Its headline yield…
- Earnings beat and missA beat is results above the consensus estimate; a miss is below. Most large US companies beat most quarters because…
- Earnings callThe earnings call is the conference call where management discusses results and takes analyst questions, usually…
- Earnings season / earnings reportEarnings season is the weeks after each quarter ends when most US companies report, starting with the big banks around…
- EBITDAEBITDA is earnings before interest, taxes, depreciation and amortisation: operating profit with debt costs and…
- EPSEPS is earnings per share: net profit divided by shares outstanding. On results day it is compared with the published…
- Expected moveThe expected move is the size of move the options market is pricing for an event: add the at-the-money call and put…
- Form 4Form 4 is the SEC filing a company insider must make within two business days of buying or selling the company's…
- Forward P/EForward P/E is the share price divided by the earnings analysts expect over the next twelve months. It is built on a…
- Free cash flowFree cash flow is the cash a business brings in from operations minus what it spends on equipment and buildings.…
- Gap up and gap downA gap is a price opening far from where it last traded, with nothing in between. US stocks gap at 7:00 PM IST because…
- Gross marginGross margin is revenue minus the direct cost of making the product, as a percent of revenue. It shows pricing power…
- Guidance (earnings guidance)Guidance is a company's own forecast for the next quarter or year, given with results. The quarter was priced weeks…