Impact Of Company's Quarterly Result On Share Price

Impact Of Company’s Quarter Result on Stock Price

Quarter results of all listed companies are released as per SEBI guidelines. Due to which a very rapid fluctuations in stock prices can be seen. Sometimes a minor jump in sales figures drive the stocks in green and several times stocks fall after increasing in sales number also. It’s almost impossible to analyze the quarterly result in one go just after seeing the flash of news on TV.

There are certain key things which can be analyzed in quarterly result:

·         Gross Sales: It’s basically a number of total sales figure.

·         Net Sales: From gross sales, one can derive net sales by deducting sales return, sales allowances, and sales discount from gross sales.

·         Operating expenses: To run a business there is a minimum base requirement of capital to operate. Basically this is the cost of running a business. Salaries of employees, electricity, legal fees and business license are some of examples of operating expenses. 

·         Operating Profit: When operating expenses are deducted from net sales we get the operating profit or Earnings before interest tax depreciation and amortization (EBITDA).

·         Net Profit or net income: In the income statement we can find details about tax and loan repayment which when deducted from operating profits gives us the net profit.

Apart from above mentioned key points there are several more things which can be analyzed by studying quarterly result of a company. All these key parameters are basically viewed and analyzed under the branch of fundamental analysis and in a long run all these key numbers will be reflected in share price.

On a view to judge the quarterly result for trading purpose one has to speculate the market price and one has to focus on only one thing “expectation”. It is a wrong sentiment that profit means price hike and loss means price drop. There is no any thumb rule like this but if market is expecting a profit of 100 of Xyz Company compare to previous quarter number of 200. In this case profit is going to be declined but if expectation is of 100 and result came of 150 although it is reduced compare to previous quarter number but it is more than the expectation so market will react accordingly.

It just depends on the individual that how one looks at the quarter result either for a long term view or a short term view, one is speculating the price or depending on fundamental aspects. But one thing is certain that either it take a time of week month or years the impact of result will be reflected in share price.