When investing in stocks, the first thing experts advice the retail investors is to make an informed choice. They recommend investors to research about the company before putting in money.
One of the ways to analyse a company’s performance is to look at its earnings performance. Key heads to look at in a quarterly result are profit, revenue and margins.
But investors mostly get confused whether they should look at the profit number or the revenues. So which head should one focus on?
Udayan Mukherjee, Consulting Editor of CNBC-TV18, said revenues are more difficult to fudge and show a real picture of the company’s performance.
“A lot of investors take an investment call based on a single quarter’s numbers. That is a dangerous this,” he said.
So what are the factors that an investor should look at while reading a company’s balance sheet and earnings numbers?