M1 Blog

Earnings reports, and what to look for as an investor

M1 Team
M1 Team April 25, 2022
Image showing a stack of white binders full of documents and a banner along the bottom with the text "The Investor's Mindset, where smart investors get smarter."

It’s earnings season, and analysts are abuzz. Much like a school report card, earnings reports reveal how publicly traded companies have performed over the last quarter. Today, we have a short lesson on what’s inside these reports and how to grade your investments. 

We’re also talking about:

  • Investing like Warren Buffett
  • Salary transparency
  • The rules of travel

Reading

FIRST-QUARTER EARNINGS

Apple (AAPL), Amazon (AMZN), Meta (FB), and Alphabet (GOOGL) all report earnings this week. While market sentiment, the media, and rumors can all impact a company’s stock, the most tangible factor is its earnings.

But what are earnings reports, and how do they affect your portfolio?

An earnings report is a filing made by public companies each quarter to report their performance. Each includes three key financial statements:  

  1. Balance sheet: The company’s assets, liabilities, and shareholder equity. 
  1. Income statement: The company’s financial performance, including revenue, net income, earnings per share, and expenses. 
  1. Cash flow statement: The flow of cash coming in and leaving a company through its operations, investments, and financing. 

The reports also give insight into sales, financial risks, and earnings before interest and tax.  

By analyzing a quarterly earnings report, investors can gauge the financial health of a company beyond its stock price. This helps shareholders decide if the business is projected to grow or stagnate, and whether to buy, hold, or sell. 

Learn how to analyze and research stocks like expert investors >>

Well-being

This week, take a moment to focus on:

Your salary: New York City’s new salary transparency law requires companies to share the minimum and maximum salary on each job posting. Even if you don’t live in NYC, this is what the law could mean for you.

Your habits: Can one sentence help you build better habits? Here are 30 one-sentence stories to inspire a change that can improve your routines.

Your travels: Summer travels is estimated to reach pre-pandemic levels. Make your next trip intentional with 21 travel rules from lifestyle author, Tim Ferris. (#4: Stop living to relive).

Sign up for M1 to receive The Investor’s Mindset in your inbox every Monday.