Skip to content

Why Earnings Season Matters for You

July 9, 2013

Today marked the beginning of earnings season, and as usual it led off with Alcoa (AA) announcing its earnings results. While some of you may know what Alcoa is, I would not be terribly surprised if some of you had never heard of this company.

Alcoa is the world’s 3rd largest producer of aluminum, and is headquartered in Pittsburgh, Pennsylvania.

This is all well and good, but why should we be paying attention? After all, if you don’t own shares of Alcoa, why should it really matter what their earnings are like? For the record, the company lost a little over $100 million this quarter, but excluding charges related to a legacy matter they earned $76 million, and had an earnings per share of $.07, both of which beat estimates.

Did you see what just happened there?

The company announces in one breath that it lost money for the quarter, and then turns around and says if you ignore some bad stuff we made money – I’m sure some individuals wish they could do the same thing!

All kidding aside it is always important to not only look at the earnings numbers that the firm’s announce, but also to look at the quality of those earnings. Net income results can be full of one-time items, tax adjustments, impairment losses, depreciation catch ups, and other noise that can make analyzing their earning difficult for the average person. Thankfully all of these companies release earning documents, hold conference calls, and put out other information regarding their financial results. Even better, the majority of this information is free online if you visit the corporate website or one of the more popular finance search engines such as Yahoo or Google Finance.

It’s always important to read the lines, and equally important to read between them.

Wishing you a profitable earnings season!


From → Discussions

Leave a Comment

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: