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Writer's pictureMax Teh
Sep 83 min read

Unveiling a Company's Growth Potential: Important things to look at in Quarterly Earnings Reports

Disclaimer: This communication is provided for information purposes only and is not intended as a recommendation or a solicitation to buy, sell or hold any investment product. Readers are solely responsible for their own investment decisions.

 

KEYPOINTS

  • Building a winning stock portfolio requires evaluating companies for growth potential. Publicly traded companies offer valuable clues through quarterly earnings reports.

  • Analyzing these reports lets you assess a company's financial health, profitability, and trajectory to see if it aligns with your investment goals.

  • By focusing on key metrics like revenue, cash flow, profit margins, and debt levels, you can gain valuable insights for the companies.


 

Table of Contents


 

In our journey to building a winning stock portfolio, we need to assess a company's potential for growth. Publicly traded companies release quarterly earnings reports that provide valuable insights into their financial health and performance. 

By analyzing these reports, we can gauge a company's trajectory and determine if it aligns with our investment goals.


Key Figures to Look for in Quarterly Earnings Reports

1. Growth:

  1. Revenue:  A company's top line. Steady or increasing revenue indicates healthy sales growth.

  2. Income: Net income, or profit, reflects a company's ability to generate profit from its revenue. Increasing net income suggests the company is not only growing sales but also controlling its expenses effectively.

  3. Operating Cash Flow (OCF):  Measures the cash a company generates from its core operations.  Positive and rising OCF indicates a company's ability to fund its ongoing operations and potentially invest in future growth.

  4. Free Cash Flow (FCF):  Cash available for distribution to shareholders after accounting for all expenses and capital expenditures. Rising FCF suggests a company's financial strength and its ability to pay dividends or reinvest in growth initiatives.

  5. Guidance/Outlook:  Management's forecasts for future revenue and earnings growth can provide valuable insights into the company's expectations.