Break Down Six or Nine Month Earnings into Quarterly Percentage Changes

Suppose your Company announces that earnings for the six months that earlier (+ 25%). Your "pet" stock inust be in great shape. You couldn't ask for better results—or could you? Beware. The Company reported earnings for six months. What did the stock earn in the last quarter, the three months ended in June? Maybe in the first quarter ended in March the stock earned $1.60 per share versus $1 (+ 60%). What does this leave for the last quarter ended June 30? Ninety cents versus one dollar. This is a terrible report, even though the way it was presented to you sounded terrific. If you own common stock in a Company whose earnings had been up 60% and they came out with a Statement of $.90 versus $1 (down 10%), you had better wake up. The outfit might be deteriorating.
You can't always assume that because an earnings report appears to be rosy, everything is fine. You have to look deeper and not accept the reassuring manner of corporate news releases reported in your favorite newspaper.


Many times, earnings declarations are published for the most recent nine months. This teils you nothing, and all too ofteii it masks serious weakness in the numbers that really count. The first quarter may have been up 30%, the second quarter up 10%, and the last quarter off 10%. By always breaking down the figures to show the  uarter-by-quarter earnings, you will be able to see a completely different picture and
trend.