EN
Investors must know how to read quarterly results of a company if they want to make informed decisions. Quarterly results are the most effective way to gain insights into a company’s revenues, profits, expenses, and overall financial position. They also indicate the company’s management performance and the company's future growth potential. If investors analyse quarterly reports properly, they can determine whether a company is improving, struggling, or maintaining a stable position in a changing market.
Key Takeaways
-
Quarterly results reveal short-term financial performance and trends.
-
Key metrics such as sales, profit, margins, and EPS indicate a business's health.
-
Management commentary highlights plans and risks.
-
Comparing results across periods and peers improves investment decisions.
How to Read Quarterly Results of a Company?
According to experts, reading a company's quarterly earnings is an art that needs to be cultivated over time through careful, deliberate effort. For any company, a quarterly earnings report is like its inner compass, giving a sneak peek into its current and future performance. It also helps analyse the company's value. Yet, many ordinary investors still cannot fathom a company’s quarterly earnings. How to read the quarterly results of a company? What do these results tell us about the company? Why do companies publish their quarterly results in the first place?
As per SEBI (Security and Exchange Board of India) guidelines, every listed company must publish its quarterly reports of the company to the public to safeguard the interests of the investors.
As an investor in a company, a company’s quarterly results will help you assess the present and future performance and value of the company. The quarterly result also tells you whether you should invest long-term in the company. For short-term investors or intraday traders, a big company's quarterly results can have a direct impact on the market. Every time a big company announces its quarterly results, the markets rise or fall, depending on the effect.
Where Are the Quarterly Results of a Company Available?
BSE & NSE
The quarterly performance of public companies must be posted on the official websites of the Bombay Stock Exchange (BSE) and the National Stock Exchange of India (NSE). These filings include financial statements, presentations, and regulatory disclosures, which are made accessible immediately upon submission.
XBRL Filing for Quarterly Results
XBRL (eXtensible Business Reporting Language) is a standardised format for tagging financial and compliance data to allow for machine-readable analysis. Listed firms submit quarterly results and compliance reports using the NSE's NEAPS platform, which accepts XBRL-based uploads and data input. XBRL will be required for quarterly files beginning in 2026.
XBRL taxonomy availability (common quarterly filings):
|
Filing Type |
XBRL Taxonomy Available? |
|
Reg 33: Financial Results (Ind AS) |
Yes (Financial/Notes) |
|
Reg 33: Banking/NBFC |
Yes (Sector-Specific) |
|
Shareholding Pattern (Reg 31) |
Yes |
Company Websites
Numerous companies also present their quarterly results on their respective official websites under the Investor Relations section. These generally include comprehensive financials, investor presentations, and earnings call transcripts or recordings that help one better understand management's comments and the company's future outlook.
Advantages of a Quarterly Report
A quarterly report provides a concise overview of a company's financial performance and operational growth over the last three months.
-
A quarterly report provides the most current information on a company's financial performance, making it easier for investors to track trends in revenue, profit, and costs over a very short period of time.
-
It provides reasons and explanations for the quarterly results, helping to more easily understand deviations from expected performance or targets.
-
Investors can judge management's efficiency, the stability of operations, and the business's future based on the most recent data.
-
Transparency is increased, and informed investment decisions are supported by reducing reliance on outdated annual figures.
Things to Consider For Quarterly Reports [H2]
Operating Profit
Operating profit = Net sales – Operating expenses
Operating expenses include costs of running the business, such as salaries, utility bills (e.g., rent and electricity), office expenses (e.g., stationery), and license costs. It also includes the costs of research and development, legal and banking charges, among others.
Other fixed and variable expenses that form part of operating costs need to be deducted from net sales to arrive at the business's operating profit. A high operating profit indicates a healthy business. The operating profit reflects the ongoing business conditions and the efficiency of management.
Margins
Margins point to the ‘safety net’ of the company. Profit should ideally not come at the cost of margin. A decrease in the company’s EBIT margin indicates its profitability has taken a hit.
Interest Cost
Interest cost is the money paid for a loan amount to run a business. Hence, an increase in interest cost indicates an increase in the company's debt.
Some Other Pointers
Net Profit
A company’s net profit is also called its bottom line. It refers to:
Net profit = Operating Profit – Interest – Taxes + Non-Operating Income.
It is one of the crucial indicators of a company’s financial health. Hence, it is the most sought-after pointer in a quarterly earnings report. The higher the company’s net profit, the higher the company’s profitability.
EPS (Earnings Per Share)
When net profit is divided by the total number of outstanding shares, we get EPS. It indicates the company's profitability. EPS is the part of a company’s profit that is allocated to every individual share of the stock. It is imperative for investors and people who trade in the stock market. The better the EPS of a company, the higher is profitability. It is yet another important indicator of a company’s financial health. It is widely used in the industry.
For an investor, EPS is a strong indicator of a company's performance. This, in turn, results in more earnings for the shareholders. For an investor interested in a steady source of income, the EPS ratio helps them understand the room a company has to increase its current dividend. EPS of a company should always be compared with other companies.
Also Read: What is Earnings Per Share (EPS)?
How to Read Quarterly Results?
Gross Sales
Gross sales are the total sales of a company within a stipulated time. A steady rise in gross sales is an indicator of growing demand and good business health.
Net Sales
Net sales are the sum of a company’s gross sales minus its discounts, returns, and allowances. Net sales can often be factored into the statement of income as top-line revenue. This is a better indicator of business health than gross sales.
Operating Income
Operating income indicates the amount of profit realised from a business’s operations, after deducting operating expenses such as wages, depreciation, and cost of goods sold. It is a measure of the profitability of the company.
On the other hand, non-operating income is other-than-business income. It includes revenues made from dividends, rental income, and others.
A steady decrease in operating income could mean a declining market share or reduced demand for the company’s products or services.
What Else to Look for Quarterly Earnings Report?
When it comes to banks, investors should also look at things like net interest margins and non-performing assets. Experts say that investors should also look at the company’s cash-in-hand and pledged shares. All companies may not be declaring their pledged shares quarterly. Investors should also check out the asset-liability statement with the September quarter result, as it indicates half the financial year.
Parts of the Quarterly Result
A company’s quarterly earnings report typically consists of an earnings statement, balance sheet, and cash flow statement. Here are the details:
Earnings statement: This document consists of the company’s earnings performance within a stipulated time.
Balance sheet: This consists of the company’s assets, shareholder equity, and liabilities, if any. It gives an idea of what the company owns and any outstanding items it owes.
Cash flow statement: This document provides information about the cash flow the company receives. This could come from both its current business operations and investor sources. This also includes details on the outgoing cash used to pay for business-related investments and activities during the period.
These statements give you a glimpse into the financial status of the company. It edits and shortens the information into a simpler format.
Why do Investors Need to Look Out for Earnings Announcements?
Earning reports are often among the largest catalysts for stock movement. In the case of bigger stocks, earnings reports can shake the market. On the day the earnings reports are released, the stock market could be trading at a record high or low.
When a company improves its sales yet fails to meet the expectations of the analysts, people will rush to sell their shares. Hence, estimates of the report are also as important as the report itself.
Other important information for investors
Risk Factor
An investor or trader should carefully go through the potential risks addressed by the company in its earnings report. The risk could be with regard to a new segment of the business, a change in the company management, among others.
Legal Proceedings
This section of the company report mentions any current legal proceedings or outstanding lawsuits. This does not necessarily mean that an investor has to avoid this company. It’s important to check out the details of the legal case. Small lawsuits are prevalent. However, one needs to tread carefully when it involves big lawsuits.
Unregistered sales of equity securities
This is the part of the report where the company must supply information about “all equity securities of the registrant sold by the registrant during the period covered by the report that were not registered under the Securities Act.”
Conclusion
Quarterly earnings reports reveal a lot about a company’s financial health. By educating yourself more about the ways to read and evaluate earnings reports, you could gain a lot of insight into the company’s present performance and its past. Earnings reports could help analyse potential trades. It’s important to consult the earnings report before making any investment. If you want to know more about the quarterly results of a company, you could start trading with Angel One!
