Tuesday, October 29, 2013

Earnings calls—a chance to look under the hood

Yesterday, Apple disclosed its third-quarter earnings…and opinions are all over the map! (Disclosure: Wade Financial Group owns stock in Apple.)

This often happens. Earnings calls give a snapshot of the company, and there’s a lot of different data, that can be interpreted in a number of different ways. It’s a science…and an art.

Apple is a case in point—you could look at different aspects of the earnings call and take away completely different stories. 
  • Sales of iPhones and iPads are up over last year—great! 
  • Guidance on future profit margins did not meet analyst expectations—not so good. 
  • What are the possible new products? 
  • What are the expectations for holiday sales? 
  • What else is the company saying?
Earnings calls like this give investors a chance to “open up the hood and examine the engine” on a company. Individual investors can take the time to investigate fully and form their own opinion, independent of the market. For instance, bad news could send the stock sliding…which could be a buying opportunity, if you’re able to recognize it.
But, it takes a lot of time and energy—not to mention objectivity—to do that thorough work. And not just on one company, of course—on a full investment portfolio.  Just reading the headlines and trying to jump on market bandwagons is not going to cut it.

That’s why it’s so important to engage a professional, who is looking at these stocks and companies day in and day out…so you don’t have to.

--Nick Asmus, Wade Financial Group Investment Department

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