Every quarter, public companies release an earnings report that tells you how they performed over the past three months. This is the single most important regular event for any stock — it's the moment where reality meets expectations. The three numbers that matter most are: revenue (total sales), earnings per share (EPS — profit divided by total shares), and guidance (what the company expects going forward). A company can beat on revenue and EPS but still see its stock drop if guidance is weak.

Before the earnings report drops, Wall Street analysts publish estimates — their predictions for revenue and EPS. The stock price already reflects these expectations. What moves the stock isn't the absolute numbers but whether they BEAT or MISS expectations. If analysts expected $10 billion in revenue and the company reports $10.5 billion, that's a 5% beat and typically bullish. But if they guided for $9.8 billion next quarter when analysts expected $10.2 billion, the stock might sell off despite the beat.

Beyond the headline numbers, dig into the earnings call — a conference call where the CEO and CFO discuss results and take questions from analysts. This is where the real alpha is. Listen for changes in tone, new product announcements, margin trends, and how management responds to tough questions. Companies that are confident give specific guidance; companies that are nervous give vague ranges. The Q&A section is often more informative than the prepared remarks.

Earnings season happens four times a year — usually starting in mid-January, mid-April, mid-July, and mid-October. The biggest companies (Apple, Microsoft, Amazon) tend to report in the last week of January, April, July, and October. Options prices spike before earnings due to increased uncertainty (higher implied volatility), creating opportunities for options traders. Understanding earnings is essential — it's the scoreboard for public companies.