Earnings are the earnings of a company by which its value is measured. Earnings per share (EPS) is an example of earnings. In general, earnings refers to the income from the sale of stocks or other ownership units, property used for plant, equipment, buildings, supplies, and rental revenue. Other types of earnings include net income from operations, gross profit, selling and administrative expenses, and net income attributable to equity holders, and net income from voluntary liquidation.
The timing of earnings reports may vary depending on the type of business and the sector in which it is involved. Most companies issue earnings reports during the third fiscal quarter of the year, and some issue them monthly. Earnings are also the measurement of the value of a company’s performance. For a detailed analysis of certain aspects of corporate operations many other more specific terms are also used such as EBITDA and EBIT.
Earnings surprises can have significant effects on share prices of listed companies. However, there is usually little effect of earnings surprises on the market price of the company’s common stock. This is because most financial reporting guidelines only take into account the most recent period for which earnings have been reported. Thus, financial metrics such as EPS growth over the last twelve months would be of little use to investors if a company has not provided earnings reports for the last three quarters. Consequently, most financial analysts focus their attention on the most recent six months for market analysis.