How do I dissect the earnings call?
Well, its that tine of the year again...earnings season. Would like to hear from a few ER professionals on how they best analyze, format and interpret information from an earnings call. Just wanted to have some people bounce around things in here for not only me but the rest of the ER interns out there for feedback etc.
Earnings call...what do you focus on? (Originally Posted: 03/13/2008)
Hi all,
So I'm on a crusade to understand what's it like to be in ER. I guess my question is that for an ER associate who participates in an earnings conference call, what are the ideas that he or she should be focusing on?
I listened to some conference calls and I noticed that some key things are:
1) Where the business is at in terms of market presence and products development 2) New product offerings, new markets penetration and cost reductions management has tried to make or plans to make 3) What kind of competition does the company face 4) Revenue, Margins and EPS for the current year and what they expect to achieve in the next quarters and the next year end 5) How management would achieve the projections and maintain margins
Anything else I should be looking out for? Thanks so much!!!
can give my two cents from the credit side (for what its worth)
-focus on expected uses of FCF (reduce debt, dividends, buybacks, etc) -any comments around acquisitions (generally negative for bondholders if debt financed as new debt will likely be pari with existing debt holders. if cash is used from b/s, cash that isnt going to pay down debt) -overall market conditions -any company guidance -cost cutting initiatives -any color around pricing -raw material impacts (are they hedged? how much? what % of COGS is represented by raw material costs) -any legal/regulatory/environmental issues
hope that helps.
You will rarely get any useful information from earnings calls.
If an analyst has an interesting angle on the numbers or an insightful question, it won't be asked in a forum that the competition can listen in to. The occasional exceptions usually come from the younger, more hungry, analysts that are trying to make a name for themselves but can be at the expense of their relationship with the company.
I've had companies call me in advance of calls to ask me what I was planning on asking so they can prepare answers. You accept this because you'll get to ask your real questions in a private forum.
First, you should congratulate them on achieving solid numbers, and note that they always seem to come through during challenging times.
Once that's out of the way, it's probably best to ask for more color regarding their supply chain initiatives, specifically those targeted at reducing manufacturing costs per hectoliter.
smuguy97....nice one. don't forget to ask about 6sigma initiatives. earnings calls are a mindless ritual...more like an orgy of analysts and mgmt. everyone's just fucking each other.
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