How To Find Out How A Company Is Doing Financially

It'southward earnings season for major corporations - and as they report their earnings per share, they also may share some information that is useful to candidates who are being recruited to join their staffs.

Even so the information that'southward important to potential hires may non show upward on CNBC or in wire service reports on earnings for General Electric or JCPenney. Yous may demand to dig it out of a Securities and Exchange Commission filing or tease out in a spreadsheet, or read analysts' reports on the visitor's business strategy.

If this sounds similar a lot of work, it is. Withal y'all're considering whether to invest far more than your money in shares. You may invest your career, your brand, your reputation and your futurity financial prospects if you join their team.

Equally a former business editor, I have read hundreds of public companies' quarterly reports, and know the importance of pulling up a few different financial reports and looking at the trends in profit margins and total U.S. staff size (usually found in the 10-Thousand annual study).

You besides need to look into the time to come and try to evaluate whether the company can go on its dominant role and its strong growth, said Sheraz Mian, director of enquiry for Zacks Investment Inquiry in Chicago. So grab your figurer and get set to dig into the company's past functioning and future possibilities, with these four strategies:

1. Get by the headline.

Read the earnings statement all the way through, and so dig upwards a scattering of 10-Q quarterly report on the SEC's website. You want to consider iii to five yr trends on revenue or sales figures, and operating profit margins, said Mian, whose background is in research for investors. "Y'all desire to get a experience for if the company is able to increase its revenue," he said. Now peer into the future. Public companies often give "guidance" on how their sales and turn a profit margins will exist for this year, and sometimes beyond. Pull that up. You also may want to see what a leading analyst (from Zack'due south or some other organization) is anticipating.

two. Read upward on the risks.

In the x-K annual report, companies are required to list the risk factors they face. Often this is presented in legalese, but information technology still tin exist worthwhile to review, said Mian. Pay attention to large levels of debt maturing in a brusque timeframe, particularly if the company is growing and may demand to borrow some more money. Check out key competitors. One adventure that probably won't be mentioned is an acquisition by a larger visitor, or peer companies that are No. 3 or less in market share are more likely to be gobbled up, said Mian, as are companies owned past an older owner or someone "who has cipher else to prove."

three. Check the comments.

You want to hear what'due south happening unfiltered by management. So read what workers are saying hither on Glassdoor, likewise as on other contained message boards or on LinkedIn alumni groups for the company. Sometimes rumors run rampant, and may not be true. But often there's a speck of truth amid all the churr that could indicate big growth or big bug ahead. The play a joke on is to read a variety of these comments, perchance ask a question or two, then compare them to media accounts and the numbers you've been gathering on the company's fiscal standing.

4. See how information technology measures up to its peers.

Yous want to see if information technology is gaining market share or losing it, if it has more than cachet or less than its competitors and more. This may not be and then easy if the visitor is pocket-sized or privately held, just it's worth the effort to try. Sometimes you lot can do this informally by talking to a supplier that works with all the players, a friend who recently moved from the competition to the company you're targeting. Or you can review the financial documents of its 2 largest rivals. If they are in an industry that is not growing much, i visitor's growth is most ever at the expense of another, said Mian.

You lot don't need to be a CFO or an annotator to practice this kind of due diligence, but you practice need to invest a few hours fourth dimension and attending to this. The payoff volition be when you bring together a company with healthy prospects and enough growth that it can pay you a bonus after you lot've exceeded your goals.