In this post:
What are quarterly reports.
What kind of information they share in these reports
How it can be useful to you as an investor.
Public companies, as they are known to companies listed on the stock exchange, are required to report financial information in a transparent and consistent manner. That is why every quarter, these companies release their financial statements, analysis of operations and the messages that the board of directors wants to give to their investors regarding the next steps and projects they will focus on during the next period.
These quarterly reports, of which there are a total of 4 per year, are extremely important as they allow analysts and investors to identify how sales strategies or cost cuts are affecting the companies.
Within these quarterly reports you can find the consolidated or separate financial statements for each business unit that the company has under control, regardless of how they are presented, here you can see the composition and allocation of assets, liabilities and capital of the company.
In the Income Statement you will be able to analyze the company's operating movements, the composition of sales, the expenses associated with production, payroll, advertising and even the amount of taxes being paid for the operation.
In addition to these two financial statements, in some cases, companies offer a communication section, where the president of the board of directors or, in general, the CEO of the company shares a reflection on the results obtained, the corrections to be made for the following reports and, in most cases, the growth projections for the following months.
These quarterly reports can affect the company's stock price movements. For example, if a quarterly report proves better results than analysts expected, the company's stock is likely to rise in price; conversely, if the numbers show a lower-than-expected performance, the stock price usually declines after the announcement.
In some cases, the board offers messages that prepare investors for periods of greater difficulty, as the Netflix board did in 2022, when it announced a possible loss of more than 2'000,000 subscribers for the following period. Although Netflix's stock fell after the announcement, by "only" having about 970,000 reported subscriber losses in its next period, the stock price stabilized, being that the result, while bad, did not become catastrophic as predicted.
Quarterly reports usually occur on pre-scheduled dates and are declared within the official pages of each company. However, it is not surprising that in certain circumstances companies postpone their reports due to events out of their hands or in case some last minute event has a considerable impact on their reports.
Now that you know this, always keep an eye on the quarterly report announcements so that you can make decisions according to the strategies of each company.
*This is an illustrative example and does not represent an investment recommendation.