Communication Methods Investors Expect From the Company They Own Stock In
Communication is an essential part of investor relations to ensure control of information flow between a company and its shareholders. Companies must maintain a high level of transparent relationships with major stakeholders who play a significant role in their success and growth of a business. The Securities and Exchange Commission requires stock companies to disclose their company’s performance, a legal requirement that must be accurate and reported timely.
Investors and shareholders expect to receive information from their company stocks, including an earnings calendar, an announcement schedule, and earnings reports. Corporations and small businesses must disclose their net income, earnings-per-share, sales, revenue, and continuous operating earnings every quarter to SEC. They submit this information in earnings reports using the 10-Q Form, which shows the performance of a company.
A beginner investor does not understand how to interpret financial statements and the information in the 10-Q document. An earnings report shows investors if the company’s performance is top line (net sales and revenue) and bottom line (net income). These two metrics are useful to analyze a company’s stock. SEC’s Form 10-Q contains required financial information for disclosure to the public. You can access a company’s financial filing free on SEC Edgar Database.
What to Look For in an Earnings Report?
When you are reviewing an earnings report, the most important things to search for are the risks, such as pending lawsuits or the conditions of the market. Institutional investors and Wall Street analysts rely on seasonal earnings reports to make predictions for the next quarter or year. For the average investor, an earnings report is complex to understand if you lack knowledge in finance and investments. Advanced investors are skillful in this profession after years of experience and studying the national, global markets.
5 Helpful Tips Before You Invest
It is difficult to understand the fundamentals of trading stocks and Forex and the information in a company’s financial reports. Before opening an investment account with a brokerage, dedicate time in your daily schedule to learn about investments, the risks involved, and various strategies. Listed below, there are five tips to get you started on planning your future wealth.
- Create an Investment Plan
Investment plans are guides detailing a budget of the capital you have available for investments at once or on a monthly, quarterly, or yearly basis. You need to estimate what a brokerage may charge for commission and monthly service fees. Keep your investment plan separate from a financial plan until you actually invest.
- Take Charge of Your Emotions
Experienced investors learned in their early years of investing in stock and Forex to avoid emotional trading. Emotions can interfere with you making the wrong decisions and cause potential health problems, mental and physical. Remember, if you lose control of your emotions, it can lead to you losing all your invested capital.
- Research the Stock Market
Learn as much as possible about the stock markets and the different investment options, such as stocks, bonds, currencies, cryptocurrencies, and other products. You can find plenty of learning materials and information for investors and companies on the SEC website and brokerage sites. It’s best to perform due diligence before leaping into the stock market and risk losing your hard-earned savings.
- Invest Money Based on Your Financial Means
Financial means is not living above what you can monetarily afford. First-time investors have to plan efficiently using a budget to account for their monthly savings, expenses, and earnings. Do not invest cash you do not have to spare that will cause any additional risks.
- Use a Demo Account
Open a free demo account with a reliable brokerage to receive hands-on training without using your cash. It will provide experience and allow you to test the strategies learned during your research. A demo account is a safe way to practice because there is no cash deposit requirement to open an account or risks.
Shareholders and investors have an essential role in companies continuing their operations and profitability. The SEC demands these entities to communicate accurate financial reports about their stock shares, earnings, expenses, and liabilities. Corporations and small businesses use various methods to communicate with investors, including shareholder letters, quarterly conference calls, annual shareholders’ meetings, and personal emails or calls.
These communication methods improve investor relations between the shareholders, investors and the companies. You can listen to shareholders’ meetings on a corporation’s website and review their financial statements. This information keeps investors informed about the company’s performance.