Insight: Earnings season tis upon us

It might not have the cookies, Yule logs or man in a big, red suit, but earnings season is almost as good as Christmas for any business journalist.

This week alone 60 companies are set to release their earnings, but that’s just the beginning of the festivities.

One hundred and seventy-five companies are preparing releases for the following week, and a whopping number of 216 earnings reports are coming out the final week of the month.

From excessively long SEC filings to company shockers, earnings season tis the season for business journalists to boost their portfolios by filing hundreds of stories, but what does it take to write an earnings story.

“Public companies do produce a lot of documents, but its only four times a year that we really get a good picture of how a company is doing,” reporter Andrew Dunn said.

Dunn formerly covered banking for The Charlotte Observer. He said with any earnings story there are always two things to look for – what do the results say about the health of the company and what do the results say about the health of the economy.

Dunn cited how Wells Fargo & Co, which released its earnings on Tuesday, can reflect much more than just its own portfolio.

“Wells Fargo is the largest home lending bank in the country, so it’s usually a good indicator of the housing industry in the U.S.,” Dunn said.

Dunn said before beginning the writing process, it is crucial to arm yourself with knowledge about the upcoming releases from talking to analysts to doing basic numbers research.

He said he will typically put together a list of the top five things he expects to learn from the release that way both he and his readers can know what to look for when the day of the release comes.

Bloomberg News commodities reporter Sonja Elmquist echoed this sentiment.

“I talk through a plan with my editor, highlighting likely news, what I expect them to say and usually try to come up with a couple of scenarios that would be ‘very surprising’ but not completely beyond the realm of possibility,” Elmquist said.

“I feel like it puts me in the right frame of mind to have my eyes open to weirdness and not just skim through things, seeing the predictable parts and leaving myself open to getting beat on anything screwy.”

Elmquist also said earnings conference calls help to give a story shape and fill out opinions of the company that are not just coming from management.

“For reporters, earnings calls are a good chance to listen to analysts’ questions to see what investors are curious or concerned about,” Elmquist said. “If nothing else, it gives you an excuse to call up an analyst and say ‘That was a good question’ and ask a few questions about their view on the company.”

Both Dunn and Elmquist said the first number to look for is the company’s net income because it encompasses both profits and losses.

Elmquist added that depending on your beat you might need to include other numbers high in the story.

“Some companies talk more about another measure of earnings like EBITDA or operating income, so I look at those,” Elmquist said. “We try not to make the stories too numbers-heavy.”

When asked what their best advice for journalists covering an earnings release, Dunn and Elmquist had similar responses.

Dunn said journalists have to remain confident in their reporting and to not let the spin of the company’s PR team keep them from getting out the real news.

Elmquist too stressed the importance of not repeating what the company places in its release.

“Think about what this company is going to tell us and how I can use that to say something about the world that people are going to care about once they have read the three or four crucial numbers and need to get on with their lives,” Elmquist said.

“It’s tough sometimes but that’s the real value that you are adding for readers. They can read the press release themselves.”