Stock Research
Homework Steps:
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THE KEY FACTS:
(quick snapshot... understanding your stock)
100   Stock ticker & Company Profile
110   Anatomy of a Stock - company snapshot
120   What the company does and how it makes its money
130   What Sector & Which Industry?
140   What Competitors?
150   Knowing The Share Price History
160   Knowing Number of Shares Outstanding
     
INTERNAL FACTORS:
(what the company controls)
200   Company Website
220   Annual Report (10K)
230   Latest Quarterly Report (10Q) & Other SEC Filings
240   Conference Calls
250   Earnings Guidance Provided
260   Insider Buying & Selling
270   Stock Splits
275   Secondary Offerings
280   Dividend & Yield
     
EXTERNAL FACTORS:
(what others control)
300   Analyst Ratings & Expectations
310   Major Holders
320   Major Index Membership
330   Short Position
340   News Headlines
350   Industry Events
     
KNOWING YOURSELF:
(what you can control)

400   Your Available Time
410   Age/Risk Tolerance
420   Don't Buy All At Once
430   Diversification
     
CHECK THE EXPERTS:
500   Jim Cramer's 25 Rules for Investing
510   Warren Buffett's Stock Portfolio
520   Business News - TV & Newspapers
530   Business News - Websites
540   Last check: Cramer's latest comments on MadMoneyRecap.com
     
TRADING RESOURCES:
600   Stocks 101: The Basics
610   Online Trading 101 (vs. paying a broker)
620   Anatomy Of A Stock:  The Parts
630   Mad Money Recap
640   Setting up your own free Yahoo! Finance Portfolio
650   Stock/Investing Glossary
     
ADVANCED TOPICS:
(coming soon)

700   Open Step
750   Open Step
790   Open Step
     
FREE HOMEWORK WORKBOOK CHECKLISTS:
800   Ongoing Weekly Homework for each of your stocks
WB   Free Stock Homework Workbook - PDF Download

 

 

 

 

 

 
 

Next Step:                                                                                                         Last updated:      
  250  Earnings Guidance Provided                                                                                  Share

Reading more, beyond the bottom line...

Earnings Guidance is the barometer against which a company's performance is judged on a quarterly basis.
To use a simple analogy, imagine a hot dog vendor who has promised his silent investment partner that he will sell 100 hot dogs daily to achieve a profit, after costs, of $200 a day per hot dog cart owned.  And imagine that his "stock," or each single hot dog cart, is worth $10,000 based on these sales levels.  In other words, by consistently making an average profit of $200 daily, the hot dog cart's value remains at $10,000.  However, if suddenly his average profit increases (i.e., an upside surprise) to $220, and is expected to remain at that level consistently, then the hot dog cart's value, or his "stock" or "equity" in the company goes up accordingly, in this case, 10%, and is now worth more, valued at $11,000 per cart (i.e., or share of stock).   Contrarily, if the average daily profit per cart disappoints, and goes down 10% to $180, and is expected to stay at that level, then the value of each share of stock, or hot dog cart, will go down 10% as well, to $9,000.

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Stocks work the same way, based on the expectations set by their historical sales record, and factors that are expected to affect the next quarter's sales and profits.  The company sets what is called "Earnings Guidance" for the next quarter, as a total revenue and profit goal, and then divided by the total number of shares outstanding, to calculate the expected earnings-per-share, or EPS.

If the company announces that it exceeded those projections, its stock price will likely go up, and if it disappoints, then it can go down dramatically.

Other Considerations:  Along with the actual earnings reported each quarter, they are always accompanied by yet another set of guidance numbers for the quarter after that.  If that guidance indicates that sales and profitability will worsen, then the stock price can go down, even if they met or exceeded that quarters' earnings goals.

Important Note:  Some companies do not provide forward-looking guidance, as a policy.

Sandbagging - or the concept of "UPOD":  to "underpromise and overdeliver."  You should also understand this concept that many companies utilize to understate their projected earnings for the next quarter, to be as conservative as possible, so that they consistently please analysts and beat their established earnings guidance.

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What you should find in this step:

 
Our Key Findings from this step...
From this step, regarding Intel's Earnings Guidance for the next quarter, we found the following:
 
 
 

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