Course 302: How to Monitor Your Portfolio, Part 2
Inspect Earnings
In this course
1 Introduction
2 How to Review the Fundamentals of Your Stocks
3 Watch Valuations
4 Investigate Rapid Price Moves
5 Inspect Earnings
6 Monitor Dividends
7 Listen for News

Earnings estimates made by Wall Street analysts are important to the prices of your stocks. Each quarter, companies try to exceed the estimates that analysts have made. If companies exceed expectations, they're usually rewarded with a pop up in their stock price. If companies fall short of expectations--or sometimes if they only meet expectations--their stock prices can take a beating.

We don't recommend relying too heavily on whether or not companies meet or beat quarterly estimates; a company that misses estimates can still have great growth prospects. Conversely, a company that exceeds expectations may face roadblocks ahead.

Nevertheless, quarterly earnings figures are useful. A company that consistently exceeds expectations quarter after quarter is doing something right. But a company that has consistently fallen short of estimates for several consecutive quarters probably has significant problems.

Next: Monitor Dividends >>


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