When a company reports earnings in the morning (before the stock market opens) the earnings call typically takes place later that morning. When a company reports after the market closes, the call may occur at that time or it may get pushed until the following trading day.
You may find it difficult to find time to listen in on the live call, so earnings call transcripts may become a useful tool. Earnings call transcripts are printed records of earnings calls. Let’s take a look at the specifics of earnings call transcripts, including where to find earnings call transcripts.
What Are Earnings Call Transcripts?
Earnings call transcripts are written records of a conference call that occurs between analysts and a company. These calls take place after a company releases its earnings report.
Before going into more details about the call, let’s step back for a second. If you’re a new investor, you may be asking, “What are earnings reports, anyway?”
The Securities and Exchange Commission (SEC) requires a publicly traded company to submit a regular report to shareholders, usually quarterly. This report includes the filing of both a 10-Q and a 10-K form, which provide detailed accounts of a company’s finances.
Upon releasing their earnings report, companies host a conference call for analysts to discuss the results and to provide additional information, including future guidance. In the past, conference calls were restricted to Wall Street analysts and institutional investors. However, largely due to the accessibility of calls via the internet, virtually all public companies allow individual investors to listen to a live call. In fact, you don’t have to be a current shareholder to listen to the call.
Companies are not legally obligated to conduct an earnings call but it has become an expectation that most companies provide. While this is normally done for the benefit of the analysts that follow the company, it’s also a useful source of information for individual investors. Reading these quarterly earnings call transcripts should be part of your research on the stock you currently own or stocks you have on a watch list.
Why Are Earnings Call Transcripts Useful?
Earnings call transcripts provide investors with more detailed information than they may get from the earnings report itself.
Think of it this way: An earnings report tells investors what is happening with a company’s financials. The discussion that companies have with analysts after releasing its earnings report gives them more information about the “why.”
As noted above, these earnings calls are generally provided for the analysts that cover a company. Analysts who work on the “buy side” or the “sell side” use these conversations as the basis for providing a rating on a company. They are also useful for assigning a price target for the company’s stock.
Where Can You Find Earnings Call Transcripts?
Now that we’ve gone over the basics of what an earnings call transcript is and why it should be important to investors, you might wonder where to find earnings call transcripts. The good news is that most of them can be found with just a few keystrokes. MarketBeat also makes it easy to find earnings call transcripts.
Official Company Website
When performing any kind of due diligence on a company, the company’s own website can be a treasure trove of information. Companies that host an earnings call will place a link to calls or usually earnings call transcripts on their websites, typically in the “investor relations” section of websites, possibly entitled “investors” or something similar.
Another benefit of going to the company’s website: You can often view any presentation that the company gave in addition to delivering the earnings report. This can provide additional detail that may be referred to in the earnings transcripts. In some cases, companies will only provide a link to the call itself.
Financial Content Websites
Another place you can go to find earnings call transcripts is from websites that provide financial content. For example, MarketBeat provides a link to earnings call transcripts that go back years.
MarketBeat also provides an earnings screener that allows investors to see when companies report earnings. If the company has already released its announcement, it gives you headline information about what the company reported on revenue and earnings relative to expectations. This makes it easy for you to find this information using the same site(s) that they rely on for breaking news about your portfolio and stock trading terms, such as understanding price-to-earnings ratio.
Similar to financial content websites, investors can also look for earnings call transcripts via trading apps. However, many of these sites may require an upcharge to access this kind of content.
Third-Party Transcription Companies
Many companies rely on third-party transcription companies to gain intelligence on their competitors. Companies may also transcribe a company’s earnings call. However, it’s unlikely that individual investors would be unable to find a transcript through another source.
What to Look for in an Earnings Call Transcript
Earnings conference call transcripts are verbatim accounts of what was said on the conference call. These calls generally follow a similar format:
- Opening remarks from senior executives (normally the chief executive officer)
- An overview of the company’s financials (usually by the chief financial officer or someone who holds a similar title)
- A question-and-answer period with analysts
As mentioned above, earnings transcripts help investors understand the reason why a company has performed the way it has. It can also give you the background to determine whether the reasons for that performance are cyclical (transitory) or if it’s part of a longer super cycle.
Some specific information you may want to look for include:
- Was the company’s performance better, worse or the same as the previous quarter?
- How did the company’s performance in this quarter compare with performance in the same quarter the prior year? This is a particularly good question for “seasonal” stocks like retailers who rely on the fourth quarter for revenue.
Also consider a company’s future guidance. Institutional investors are always forward thinking — if you want to think like the “smart money” does, it’s important to pay attention to the company’s guidance.
It’s possible for a company to deliver strong revenue and profits but lower their forward guidance, which is why a company’s stock can go down even though it delivered a strong earnings report.
Unless investors have detailed knowledge of a specific sector, it’s helpful for investors to hear what analysts have to say about the company’s earnings call. These calls are a form of public relations for the company.
Many companies will provide a candid discussion of the company’s quarter but will present and frame their quarterly results in the most positive way possible. It can be easy for investors to hear what they want to hear, particularly if the company has a lot of interest from retail investors.
Finding Earnings Call Transcripts: Worth the Effort
Earnings season is a time when many stocks will move the most. An earnings report is like a medical checkup. It gives investors a detailed look into a company’s current financial state and it also sheds some light on how the company views its future.
Of course, a company is always out to present its best face to investors. Therefore, it’s important for you, as an investor, to use these quarterly earnings call transcripts as a starting place for your research. Always consider what the company says with your own experience in mind and make sure it’s in line with your risk tolerance and future goals.
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