Earnings Reports in Stock Rover

November 30, 2022 Printer Friendly Printer Friendly

Introduction

Earnings reports are an integral part of an investor’s due diligence when researching a company. It is important to understand that not all earnings announcements are the same. The blog will explain how earnings announcements are handled and displayed in Stock Rover.

First a word about GAAP. GAAP is an acronym for Generally Accepted Accounting Principles. GAAP refers to a set of accounting rules that publicly-traded companies must follow when compiling their financial statements. The main principle behind GAAP is the rules allow an investor to perform an apples-to-apples comparison between earning reports.

When an earnings report is initially announced it may consist of GAAP or non-GAAP earnings.

GAAP Earnings

The ultimate goal of GAAP is to ensure a company’s financial statements are complete, consistent, and comparable. GAAP governs how a company recognizes revenue and expenses making it possible to compare current and past earnings performance. GAAP earnings are all inclusive incorporating all revenue and expense items into the income statement.

Non-GAAP Earnings

Non-GAAP earnings, also known as pro forma financials, do not adhere to GAAP standards. They can be manipulated to emphasize the earnings performance of specific operational areas. Non-GAAP Earnings can exclude specific financial transactions. For example, one-time charges such as restructuring costs can be excluded, resulting in more optimistic earnings numbers. Or a company might report earnings before depreciation to emphasize cash flow, as depreciation is a non-cash expense. This makes it tough to trust non-GAAP numbers.

Earnings Announcement

An Earnings Announcement is prepared on the company’s earnings release date. It will typically be published on the company’s web site and disseminated to the press. The announcement may include a mix of non-GAAP and GAAP results. The figures may be unaudited. Key metrics like EPS, Sales, and Net Income are typically provided and it is the norm to provide additional data in income statement and balance sheet form.

If a company provides Non-GAAP earnings, they can make all sorts of adjustments that deviate from GAAP standards. For example they can subtract out what they deem as one time expenses or non-operational costs in order to make net income result look better that it will be when reported under GAAP standards.

Stock Rover differentiates Earning Announcements based on whether fundamentals are available through our data feed or not. When a limited number of fundamentals are available, Stock Rover will annotate with (Press Ann.) for Press Announcement. When more details such as Sales, Net Income, and other supplementary information are available you will see the (Preliminary) annotation.

The Full Earnings Results can be released the same day, a few days later, or weeks later from the Earnings Announcement and will be annotated with (GAAP) within a day of the results being filed with the SEC.

The timing for the release of GAAP results depends on the company and size-based time limits. Some companies will progress from (Press Ann.), to (Preliminary), and then to (GAAP). Other companies will start at (Preliminary) and then to (GAAP).

Only when the numbers are designated as GAAP can they be trusted to fully adhere to GAAP standards.

Press Announcements

Insight > Summary

When an Earnings Announcement is made, Stock Rover updates the Last Reported Qtr. to be the end date of the quarter for which the earnings results have been published.

The (Press Ann.) annotation that follows the Last Reported Qtr indicates that although an Earnings Announcement has been made; key metrics like Sales, Net Income, and other supplementary information have not yet been made available for distribution.

Below we see that the Insight > Summary tab for AAON.

The Last Reported Qtr. is 09/30/2022 along with a (Press Ann.) annotation. So we know only a limited amount of earnings detail has been released to our data feed.

Insight Panel

Insight > Visuals > EPS

For a Press Announcement, Stock Rover has only the EPS (Earnings Per Share) available for display.

Insight > Visuals > EPS tab shows the announced EPS, which could be either GAAP Earnings or Non-GAAP Earnings.

Insight Panel

Chart > Event

When an Earnings announcement is made, it can be displayed in the Chart as an Event. Earnings Announcements are denoted on the chart as squares. When you hover over a square, a tooltip will display the announced EPS value and the date of the Earning Announcement. Typically the Earnings Announcement is made near the end of the quarter. But it can be delayed as we see below with a November announcement date for the Q3 financials.

Insight Panel

Preliminary Data

Insight > Summary

The (Preliminary) annotation that follows the Last Reported Qtr indicates that key metrics like Sales, Net Income, and other supplementary information have been made available for distribution and are now available in Stock Rover.

Below we see that the Insight > Summary tab for AAON has changed as more earnings detail has been released to our data feed.

The Last Reported Qtr. is 09/30/2022 along with a (Preliminary) annotation. Remember these figures can be GAAP or Non-GAAP.

Insight Panel

Insight > Visuals > EPS

Stock Rover will display Sales, Net Income, and the available supplementary information.

The Insight > Visuals > EPS tab shows the announced EPS, which could be either GAAP or Non-GAAP earnings per share. Notice that Sales is also now available for display.

Insight EPS

Insight > Statements > Income

The Insight > Statements > Income tab displays a “(Preliminary)” annotation. Note there are no EPS values, as the figures are not yet officially known to be following GAAP standards. Also note that the “Quarterly” time period is selected, but that preliminary data can be published for yearly statements too.

Non-GAAP Income

Table > Income Statement

The Income Statement View of the Table shows the trailing twelve-month GAAP results in each row.

Using the Historical Data option we can drill down further and display TTM, Quarterly, or Yearly data for each column. Historical Data can be viewed by right-clicking on a row and selecting the “Historical Data” option from the pull-down.

In the example below, we have loaded the Income Statement View and we’ve right-clicked on the selected row in the Table and selected “Historical Data”. Stock Rover then opened a separate pane with historical data for each of the metrics in the row.

Because we’ve selected to show the “Quarterly” data Stock Rover displays the supplemental data and annotates it as “(Preliminary)”.

We can also see that the main Table only shows GAAP results, as the Q3 2021 through Q2 2022 quarterly Sales add up to the trailing twelve-month Sales figure in the main Table.

Table

Full Earnings Results

The Full Earnings Results can be released the same day, a few days later, or weeks later from the “Earnings Announcement”. The timing depends on the company and size-based time limits. Smaller companies can take longer to file fully GAAP compliant financials.

US domestic companies must submit quarterly reports to the SEC on Form 10-Q, and annual reports on Form 10-K.

Stock Rover always reports GAAP results. This can create a delay in updating the statements after the Full Earnings Results. The delay is almost entirely due to waiting for the company to file GAAP-compliant results with the SEC.

Some companies file their GAAP results with the SEC immediately with the release of Full Earnings Results. Most file within 3 weeks. But others, particularly small companies, can take even longer to file. Once the results are filed with the SEC, they are published in Stock Rover in about a day.

Insight > Summary

The (GAAP) annotation that follows the Last Reported Qtr indicates Stock Rover is reporting the full GAAP Results.

Below we see that Insight > Summary tab for AAON has changed to a final status.

The Last Reported Qtr. is 09/30/2022 along with the (GAAP) annotation.

Insight Summary

Insight > Visuals > EPS

The Insight > Visuals > EPS tab shows the GAAP results for Sales, EPS, and Cash Flow Per Share.

Visual EPS GAAP width=

Insight > Statements

The Insight > Statements > Income tab now displays the GAAP results.

Below we see the Quarterly Income Statement showing the GAAP results, along with EPS values.

The columns highlighted in purple will match the trailing twelve-month values on the Yearly Income Statement.

GAAP Income Quarter

Below we see the Yearly Income Statement showing the updated TTM GAAP results.

GAAP Income TTM

Table > Income Statement

The main Table shows the trailing twelve-month GAAP results in each row.

Using the Historical Data option we can drill down further and display TTM, Quarterly, or Yearly data for each column.

In the example below, we have loaded the Income Statement View and we’ve right-clicked on the selected ticker/row in the Table and selected “Historical Data”. Stock Rover then opened a separate pane with historical data for each of the metrics the row.

We can see that the main Table is showing the TTM GAAP results. The values for Q4 2021 through Q3 2022 quarterly Sales highlighted in purple add up to the trailing twelve-month Sales figure shown in the main Table.

Table

Summary

There is a big difference between GAAP Earnings and Non-GAAP Earnings. GAAP Earnings follow a rigorous set of well defined accounting standards, whereas Non-GAAP Earnings can heavily be manipulated by a company to make earnings seem far stronger than they actually are. For example Non-GAAP earnings can exclude company deemed non-recurring expenses, which in turn can greatly skew the true financial picture. The Earnings Announcement typically put out on the earnings release date may include a mix of non-GAAP and GAAP results.

When researching a company, remember to visit the Insight > Summary tab to determine the quarter of the most recent earning release, and whether the earnings are GAAP Earnings or Non-GAAP Earnings. You will see three possible annotations:

  1. (Press Ann.)
  2. (Preliminary)
  3. (GAAP)

When you display fundamental data in Stock Rover’s Table, you are seeing data that follows GAAP standard, this ensures that when when you compare different companies that you’re comparing apples-to-apples.

When you select to view a quarterly income statement, Stock Rover will always annotate the most recent quarter if it is based on Non-GAAP earnings.

Lastly, Stock Rover always reports GAAP results. This can create a delay in updating the fundamentals. The delay is almost entirely due to waiting for the company to file GAAP-compliant results with the SEC. The delay is well worth it, because when you are analyzing companies, you want to makes sure you are comparing things on a level playing field.




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