How To Decode Company's Earnings Outlook For Stocks Investment

Edited transcripts

UDAYAN RAY  Welcome to Fundoo Money, your 24X7 buddy on all matters related to personal finance. Now in this segment we will be discussing some of the critical things an investor needs to look at when the person is assessing how well a stock is going to do in the future. Now the stock the investor could be holding himself or herself and would be evaluating its earnings prospects.

Now as I was mentioning in this particular segment we are looking at the various things that a person needs to look in terms of numbers, in terms of information when it comes to the earnings prospects of a stock. Now to help us understand some of these critical factors, today we have with us stocks expert Mohit Satyanand.

Welcome Mohit!

MOHIT SATYANAND Thanks Udayan.

UDAYAN RAY Now Mohit, in one of the previous videos we were talking about words like quarterly results and company earnings. Now how critical is it? How does a person use that information and the information all around, to get a sense of how the stock is going to be performing in the future?

 And how does an existing stock market investor get a sense of how well a prospective investment, say a stock or something that he or she is holding is going to do in the future in terms of earnings?

MOHIT SATYANAND See earnings are critical.  I try not to let quarterly earnings influence my decisions too much because quarterly earnings can be subject to temporary fluctuations in the price of inputs, disturbances in the market etc.

I think it comes down to the strategic value of stocks in your holding. I think that stocks are very long term investments. They are the best hedge against inflation. They are the best way to build wealth. And therefore quarterly (earnings) fluctuations should not upset one in the least.

When I first look at a stock, I don’t look at quarterly earnings at all. I look at annual earnings for at least the last 5 or 6 years to see whether there has been a secular growth in both revenue and earnings. And in a growth economy like India’s if any company has grown at less than 15% compound per annum for the last 5 years, I am not interested. So that’s the starting point.

UDAYAN RAY Well anybody who is watching this would realise that this is a stock market tip with a difference. What Mohit is trying to tell all of us are ways by which people make wealth in the long term instead of making a quick buck.

Hope you like this video and people would be able to listen to this also on our Sound Cloud page. And apart from that we are on all leading social media platforms. And if you have liked this video why not click on the like button. We would love to have you subscribe to our channel. And of course you can go down to the comments section and give your comments just in case I am Mohit missed out something. We would love to hear what you have to say about it.