An earnings call is when a company opens up a teleconference line or webcast that the public can join to hear the company management talk about how the company performed recently, their plans for the future, and the market forces that exist in the current environment.
Most publicly traded companies today have adopted this practice. Earnings calls may take place once a year or during earnings seasons after the quarterly earnings have been announced in a press release. Companies often have one executive whose job is to interface with the shareholders in such settings, but various executives are often given a chance to present some thoughts.
Every call will generally feature a lengthy disclaimer statement at the beginning, end, or both, to distance the company from liability if an investor takes a hint from something said and fails miserably.
The disclaimer, sometimes called a safe harbor, generally includes a statement that goes something like, “The presentation today is for educational purposes only, and no investment advice has been given. Please consult your advisor before making investment decisions.”
Earnings will often be stated as earnings per share (EPS). Investors should also be aware that, like any good salesman, the company leaders all the call will do their best to make things sound as good as possible. This may include citing non-GAAP accounting number intentionally designed to put things in a favorable light. Investors must be willing to take it in with a degree of skepticism.
Earnings are the profits left to a company’s discretion after the costs of doing business are paid.
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