How Granny Reviews Earnings
My dears, before one entrusts a single shilling of one's hard-earned coin to any public company, one must—must—examine its earnings reports with the kind of attention usually reserved for tea temperatures and scandalous footnotes in Regency novels.
You see, earnings reviews are not merely about whether a company made more money than last quarter. Heavens, no. They're about understanding why it did, how it did, and whether it will continue to do so without gamboling into ruin.
I begin each review with the Quarterly Earnings Presentation. It’s the company’s own curated tale—charts, metrics, and bullet points meant to dazzle the masses. I examine them with a practiced squint, looking for the one chart that truly explains the quarter. Then I flip to the CEO’s prepared remarks to catch the tone: bombastic, apologetic, or simply businesslike? One learns a lot from tone.
From there, I proceed to the Annual Report and Shareholder Letter. These are my favourite parts. The annual is a financial confession booth. Balance sheets. Cash flows. The footnotes—oh, the footnotes. You’d be amazed what clever nonsense lurks in footnotes. The shareholder letter, if written earnestly, reveals the soul (or lack thereof) behind the brand.
I then assess what I call the Trifecta of Fortitude:
- Revenue Growth: Has the top line grown honestly, or is it fluffed with acquisitions and accounting gimmickry?
- Return on Tangible Capital Employed: If a company can’t earn more than a tea tin stuffed in a drawer, I move on.
- Dividend Policy: A respectable dividend tells me the board respects its shareholders. A cut tells me to fetch my handbag.
After this review, I render my verdict:
- Allocate – I would buy and tuck away shares like heirloom silver.
- Tolerate – A hold, for now. But I’m watching you, dear.
- Liquidate – Off with its ticker!
This process, stitched together over decades of tea and ticker tapes, is not just how I pick stocks. It’s how I preserve peace of mind. Because nothing—nothing—ruins a luncheon quite like earnings disappointment.