The world’s largest company announces its operating results at the end of each quarter, four times a year, and performance has a decisive impact on changes in the value of stocks.
When investors consider a company’s financial statements, they usually consider three factors. These are earnings per share (EPS), earned income and analyst forecasts.
Fortrade has prepared a free guide “How to Trade Stock Prices” for anyone interested in learning how to trade stock prices on online stock exchanges (so-called CFDs) or just want to expand their knowledge. This guide is applicable to all knowledge levels and you can download it via the link below.
Understanding the source of earnings per share, analyst earnings and forecasts, or understanding other details and how they are calculated is not that important. The key is to compare the (official) published results with analyst expectations. If earnings per share or earnings are lower than analysts’ expectations, the stocks of the companies that release the results are likely to depreciate. On the other hand, better-than-expected performance may stimulate the stock price to rise.
Analysts’ forecasts of future price trends are also very important. Forecasts refer to the business goals that the company wants to achieve and indicate the company’s future success. Therefore, if a company announces unexpectedly high earnings per share and earnings, but its forecast is pessimistic, its stock price will still tend to fall.
CFDs are complex tools and have a high risk of rapid loss due to financial leverage. Between 74% and 89% of retail investor accounts lose money when trading CFDs. You should consider whether you understand how CFDs work and whether you are able to bear the risk of high losses. Please note: You may lose everything, but it will not exceed the balance on your trading account. These products may not be suitable for all customers, so you absolutely need to make sure you understand the risks and seek independent advice. This material does not constitute an offer or request for any financial instrument transaction. Fortrade is not responsible for the use of this information and any consequences arising from the use of this information. The accuracy or completeness of this information is not guaranteed, so anyone acting on this information is entirely at their own risk. The information on this website does not apply to residents of the United States or Belgium, nor does it apply to distribution or use by anyone in any state or jurisdiction where such distribution or use would violate local laws or regulations.