Earnings Call

What is an Earnings Call?

The Earnings Call is known as the conference call between investors, analysts or a public company’s management and the media to talk about the financial results of a company during a specific period like a quarter or a Fiscal Year.

Usually, an earnings call comes before the Earnings Report. And, it comprises summary information on Financial Performance in a period.

Understanding Earnings Call

This term is a combination of the earnings report of a company, which includes Earnings Per Share or net Income, and the conference call made to discuss these results. The extensive majority of listed companies host such calls to talk about their financial results.

On the other hand, companies that are running on a small-scale with lesser number of investors are unlikely to follow this methodology. Several companies put forth a presentation or phone recording on their official websites for a specific number of weeks after conducting the actual call.

It makes it possible for investors who couldn’t log into the actual call to access the information. Generally, calls are accompanied or preceded by a press release that comprises a summary of financial results and possible details filed under securities law.

Usually, earnings calls begin when the stock Market, on which the shares of the companies are traded, is closed so as to provide a fair chance to investors to hear the presentation of management before the stock trading is resumed.

Commonly, the call starts with an official representing the company. Often, it is the investor Relations Office. He reads out the statement to restrict the liabilities of the company in case results turn different from the expectations as put forward in the discussion.

Then, the other officials, usually Chief Financial Officer and the Chief Executive Officer, discuss the financial statements and operational results for the last ended period and their impact on the future.

And then, the teleconference is opened for any further queries or questions by financial analysts, investors, and other participants.

Fundamental Analysis of an Earnings Call

Basically, analysts use the information that they learn, in the earnings call, while executing a fundamental analysis of the company. This analysis starts with the financial statement of the company.

Generally, analysts navigate through such statements along with listening to a verbal conversational recording that the company provides during the call. And then, analysts may put forward some questions during this call to understand the primary concept in detail.