The Only Five Numbers That Matter in an Earnings Report

How to read an earnings report and know exactly what matters in under five minutes.

Most investors open a forty-seven page earnings report and have no idea where to look. They read everything. They understand nothing. They make a decision based on how the headline made them feel. Then the stock moves and they still do not know why.

There are exactly five numbers that tell you almost everything you need to know about a business in any given quarter. Not forty-seven pages worth. Five numbers. If those five are moving in the right direction, the story is intact. If they are breaking down, you have a thesis problem, not a noise problem.

In this episode we go through all five.

• Revenue growth rate — not the number, the direction
• Gross margin — what it reveals about the fundamental economics of the business
• Earnings per share versus consensus — why a company can grow profits and still fall on earnings day
• Free cash flow — why it is more reliable than reported earnings and what to watch for
• Guidance — the one signal that tells you what management actually believes about the future

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