Any one please explain the things that one should look for once company release his quarterly results ?
which factors in results decides whether to buy a stock or not ?
1 Like
There are 2 broad areas that one needs to pay attention to Sai. One would be generic to all companies, and the other would be company specific based on the sector the company operates in.
Generic things to watch for :
For any company announcing quarterly results watch out for -
1) Revenues
2) EBITA Margin
3) PAT Margin
4) EPS
Compare the above four with
1) Previous quarter this is called sequential comparison
2) Same quarter last year, this is called Year on Year (YoY) comparision
3) Add up the last 2 quarter number to get half year numbers, compare the same over the previous half
When you make these comparisons you need to check for the profitability, and growth trend.
Besides all these, check for what the management has to say about
1) Future business prospects (called the guidance)
2) Industry trends
3) Other key announcements such as order book, capex, deal pipe line etc
After checking for these, check for company specific details. This mainly depends on the sector within which it operates
For example, if you are looking at the aviation sector you may want to check -
1) Fuel expense
2) Fuel cost as s % of expense
3) Fuel consumed
4) No of passanger
5) Revenue and profitability per passanger
6) Available seat miles (ASM)
7) Increase in ASM
8) EBITA per ASM
9) Aircraft utilization rate
10) No of hours flown
11) Completion factor in %
12) % of sales via internet
Etc.
So the point is, each company has sector specific variable that needs to be looked at. This is especially important if you are a long term investor.
People often crib about losing money while investing over long term...this is mainly because most of them would not know about what the need to look at...or even worse it would not even have occured to them that they need to conduct periodical due diligence.
Had they done the required due diligence every quarter, I'm sure they would have made wiser investment decisions.
7 Likes
What eps is?
nice explanation. what does it means asset quality of a stock ?
Asset Quality is mainly a term used while evaluating financial services/banking stocks. If the bank has tendered loan to high quality debtors then the asset quality is said to be good, else if they have loaned money to high risk (where in the rate of default is high) then the asset quality is said to be low.