Ignore Wall Street's Chatter: Here's Why You Need to Read Earnings Reports!

Get context from the earnings reports from articles, but drill down to the nitty-gritty of the reports to get the full picture.

Apr 25, 2014 at 11:15AM

I know, I know. Looking through SEC reports isn't always fun. Honestly, it's part of my job and sometimes I have a hard time getting through them as well. But here's why it's important. Take a look at the following tweets and see if you can get a feel for how these companies performed in the most recent quarter:

Here's how Microsoft (NASDAQ:MSFT) did over the past three months. It's Satya Nadella's first quarterly earnings call as CEO, so this is important.

Great! The company beat estimates, shares are up. Way to go, Nadella! But, then there's this:

Come on, Nadella, get it together!

OK, well, maybe Microsoft's earnings were a little confusing. Let's see how Amazon.com (NASDAQ:AMZN)did:

Well, that sounds kinda negative. How about another article from another source:

Hmm, that sounds much better.

But how do we figure out what's really going on?

The Foolish approach
To be sure, we can read the full articles and not just the headlines. But even when we do that, it's likely each article writer is using the same information and taking a new angle to make different points. And that's OK. The Motley Fool encourages its writers to do the same.

But as good as having someone recap the information can be, it may not paint the full picture. That's where going straight to the earnings report comes in. Reading one or two articles is helpful in adding context to the earnings numbers, but diving into the filings yourself will provide a fuller picture and make you a much better investor. 

Why? Because you'll be able to see the the quarterly numbers for yourself, and see what's changed sequentially and what's going on year over year. That'll give you a better long-term perspective on your stock instead of all the doom-and-gloom or unrealistic euphoria that sometimes surrounds earnings articles.

If you're new to investing, check out this Fool article on the right place to start investing now or our check out our 13 Steps to Investing Foolishly. If you'e a seasoned investor who needs to dig into earnings reports a little more, check out the SEC's EDGAR website and search for official earnings reports. Or you can type the ticker symbol on our website search box and then click the SEC filings tab. 

But no matter how you get the quarterly earnings information, make sure you're reading the official filings for yourself. It takes a little more patience than reading articles, but you'll get a better long-term perspective on how a company's doing, and you'll likely learn a little something in the process.

Oh, and here's The Motley Fool's top stock for 2014
Every year, The Motley Fool's chief investment officer hand-picks one stock with amazing potential. But it's not just any run-of-the-mill company. It's a stock perfectly positioned to cash in on the upcoming year's most lucrative trends. Last year his pick skyrocketed 134%. And previous top picks have gained upwards of 908%, 1,252% and 1,303%! Just click here to download your free copy of "The Motley Fool's Top Stock for 2014" today.

Fool contributor Chris Neiger has no position in any stocks mentioned. The Motley Fool recommends and owns shares of Amazon.com. It also owns shares of Microsoft and Qualcomm. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

1 Key Step to Get Rich

Our mission at The Motley Fool is to help the world invest better. Whether that’s helping people overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we can help.

Feb 1, 2016 at 4:54PM

To be perfectly clear, this is not a get-rich action that my Foolish colleagues and I came up with. But we wouldn't argue with the approach.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich" rated The Motley Fool as the #1 place online to get smarter about investing.

"The Motley Fool aims to build a strong investment community, which it does by providing a variety of resources: the website, books, a newspaper column, a radio [show], and [newsletters]," wrote (the clearly insightful and talented) money reporter Kathleen Elkins. "This site has something for every type of investor, from basic lessons for beginners to investing commentary on mutual funds, stock sectors, and value for the more advanced."

Our mission at The Motley Fool is to help the world invest better, so it's nice to receive that kind of recognition. It lets us know we're doing our job.

Whether that's helping the entirely uninitiated overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we want to provide our readers with a boost to the next step on their journey to financial independence.

Articles and beyond

As Business Insider wrote, there are a number of resources available from the Fool for investors of all levels and styles.

In addition to the dozens of free articles we publish every day on our website, I want to highlight two must-see spots in your tour of fool.com.

For the beginning investor

Investing can seem like a Big Deal to those who have yet to buy their first stock. Many investment professionals try to infuse the conversation with jargon in order to deter individual investors from tackling it on their own (and to justify their often sky-high fees).

But the individual investor can beat the market. The real secret to investing is that it doesn't take tons of money, endless hours, or super-secret formulas that only experts possess.

That's why we created a best-selling guide that walks investors-to-be through everything they need to know to get started. And because we're so dedicated to our mission, we've made that available for free.

If you're just starting out (or want to help out someone who is), go to www.fool.com/beginners, drop in your email address, and you'll be able to instantly access the quick-read guide ... for free.

For the listener

Whether it's on the stationary exercise bike or during my daily commute, I spend a lot of time going nowhere. But I've found a way to make that time benefit me.

The Motley Fool offers five podcasts that I refer to as "binge-worthy financial information."

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. It's also featured on several dozen radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable ... and I don't say that simply because the hosts all sit within a Nerf-gun shot of my desk. Rule Breaker Investing and Answers contain timeless advice, so you might want to go back to the beginning with those. The other three take their cues from the market, so you'll want to listen to the most recent first. All are available at www.fool.com/podcasts.

But wait, there's more

The book and the podcasts – both free ... both awesome – also come with an ongoing benefit. If you download the book, or if you enter your email address in the magical box at the podcasts page, you'll get ongoing market coverage sent straight to your inbox.

Investor Insights is valuable and enjoyable coverage of everything from macroeconomic events to investing strategies to our analyst's travels around the world to find the next big thing. Also free.

Get the book. Listen to a podcast. Sign up for Investor Insights. I'm not saying that any of those things will make you rich ... but Business Insider seems to think so.

Compare Brokers