How Earnings Reports Can Be Investors’ Crystal Ball

Earnings season is once again upon us. It is that time of the quarter where investors get to see what has been going on under the hood of their favorite company throughout the past three months. These reports give key data points that can help investors…

reevaluate their positions and decide whether they want to buy more, hold, or sell if the juice ain’t worth the squeeze anymore.

A great example of how earnings can be a roller coaster ride is Netflix (NFLX), which reported Q3 earnings yesterday after the market’s closing bell.

This quarter’s results came in stark contrast to its Q1 and Q2 earnings reports, in which the company predicted it would likely see a decline in subscribers. This move led many investors to second guess their plan to buy shares of NFLX, which is trading at a very steep discount to its all-time high of just over $700.

However, in the report released on Tuesday, the streaming giant reported the addition of 2.41 million net global subscribers, more than doubling the adds the company had projected a quarter ago. The company also posted better-than-expected results on the top and bottom lines. Following the announcement, shares of the company skyrocketed more than 14%.

This is an example of the difference one quarter can make. and of a strong earnings print, again giving pause to investors on whether or not the stock is worth adding to their portfolio.

As investors, we are planning for the long-term. That’s why it’s so important to understand the stock’s value, in addition to the company’s outlook, both in terms of its fundamental picture and its financial picture.

A company’s quarterly outlook is especially important because it can give you an insider glimpse at where management thinks the future will lead. Personally, reviewing earnings helps me figure out if this is a good time to invest. Couple this with a firm grasp of where the price is in relation to historic prices, and this can really give you a clear sign of what your next move should be.

Continuing with the NFLX example, the company started 2022 at a price over $600 a share. Compare that to now…

Continue reading at WEALTHPOP.com