In today’s fast-paced and ever-changing financial landscape, staying informed is vital for investors. If you are an investor who wants to make informed and confident decisions about your investments, relying solely on the financial statements may not be adequate. However, by taking the time to read quarterly investor presentations and earnings calls, you can gain valuable insights about the company that can help you stay ahead of the game.
A majority of the listed companies release quarterly investor presentation and organise earnings call for investors and analysts, which together complement their financial statements and provide more context to their operations, financial performance and position, and information on the factors that influence their ability to create value.
In this article, we will discuss the main benefits of reading quarterly investor presentation and listening to earnings call and some tips for doing it effectively.
It Helps You Understand the Company’s Story and Strategy
One of the benefits of reading quarterly investor presentation and listening to earnings call is that it helps you understand the company’s story and strategy. The investor presentation is a document that summarizes the key points of the company’s financial performance, business model, competitive advantages, growth opportunities, market trends, innovation initiatives, future plans, and goals.
The earnings call is a conference call (typically held in the form of a teleconference or a webcast) during which the company’s management announces and discusses the financial results of the company for a quarter or a year. By reading the investor presentation and listening to the earnings call, you can learn about the company’s vision and direction, how it creates value for its stakeholders, the opportunities that lie before it, how it intends to enhance value it in the long term, and how it measures its progress and success.
It Helps You Assess the Quality of Earnings and Cash Flows
Another benefit of reading quarterly investor presentation and listening to earnings call is that it helps you assess the quality of earnings and cash flows of the companies you are investing in or tracking.
Earnings and cash flows are key indicators of a company’s profitability and financial health, but they can be affected by various factors that may not be apparent from the financial statements alone. For example, earnings and cash flows can be influenced by accounting policies, estimates, judgments, adjustments, non-recurring items, or other events that may affect their comparability or sustainability.
By reading the investor presentation and listening to the earnings call, you can gain a better understanding of how these factors have affected the company’s performance and whether they are intentional or accidental, positive or negative, temporary or permanent. This can help you evaluate whether the company’s earnings and cash flows are reliable and indicative of its future performance or not.
It Helps You Identify and Monitor the Key Risks and Uncertainties Facing the Company
A third benefit of reading quarterly investor presentation and listening to earnings call is that it helps you identify and monitor the key risks and uncertainties facing the company. Risks and uncertainties are inevitable for any business and can have a significant impact on its performance or financial position. They can arise from various sources, such as economic conditions, regulatory changes, environmental issues, social trends, technological disruptions, legal disputes, etc.
By reading the investor presentation and listening to the earnings call, you can discover what are the main factors that could affect the company’s performance or financial position positively or negatively, how likely they are to occur and how severe they could be if they do occur.
You can also learn how the company manages these risks and what actions it takes to mitigate or capitalize on them. This can help you assess whether the company has a robust risk management framework and whether it is prepared to deal with any potential threats or opportunities that may arise.
It Helps You Compare the Company with Its Peers and Industry Benchmarks
A fourth benefit of reading quarterly investor presentation and listening to earnings call is that it helps you compare the company with its peers and industry benchmarks. Comparing companies is important for investors who want to identify the best performers and value creators in their industry or sector.
By reading the investor presentation and listening to the earnings call, you can obtain information on the company’s key performance indicators (KPIs), such as revenue growth, profitability margins, return on invested capital, customer satisfaction, employee engagement, etc. You can also understand how these KPIs are aligned with the company’s strategy and objectives, how they have changed over time or across segments or regions, and how they compare with those of its competitors or industry averages.
This can help you evaluate whether the company has a competitive edge in its market or industry, whether it is improving its performance relative to its peers or benchmarks, and whether it is capable of delivering superior returns to its shareholders.
Conclusion
In conclusion, quarterly investor presentation and earnings call are essential sources of information for investors who want to gain a deeper insight into a company’s performance, strategy, prospects, risks, and value creation potential. By reading quarterly investor presentation and listening to earnings call regularly and critically, investors can make more informed and confident decisions about their investments. Some tips for reading quarterly investor presentation and listening to earnings call effectively are:
– Read them in conjunction with the financial statements and other sources of information, such as analyst reports, press releases, news articles, etc.
– Look for consistency and coherence between the information provided in different sections of quarterly investor presentation and across different reporting periods.
– Pay attention to any changes or trends in the information disclosed during earnings call , such as new opportunities or challenges