Earnings reports and major stock events

- [Instructor] Every publicly traded company has to report earnings to investors once a quarter. Let's take a look at what this process looks like. So I'm in the FactSet platform and I've pulled up the data related to Wynn Resorts. Now Wynn is FactSet Notes operates different casinos, in particular in Las Vegas, but also to some extent around the world. And we can go through and using FactSet, we can kind of see what's happened. But what I want to highlight here with Wynn is we have this metric EPS, or earnings per share, and this shows us every quarter over the last few years what Wynn has earned and what they're projected to earn going forward over time. And we could go back and we can look at this kind of over a longer period of time, seeing sales, EBITDA, EBIT, all the way down to net income. And then again, ultimately that flows into earnings per share. Now that's interesting enough, but what I want to highlight is every single quarter, companies like Wynn have to come out and they have to tell investors what's going on with the firm. So, and there's lots of different places, I'm just using FactSet here, but this information is reported all over the place. CNBC, whatever your brokerage firm is, all of them will have information about that. So I'm going to put in for Wynn here under News, Wynn Resorts. And we see, okay, here's Wynn. We've got their Q3 earnings transcript, and I'll pull that up along with their basic quarterly filing. So we see here, this is for Monday, November 4th, 2024, Wynn Resorts Reports Q3 adjusted earnings of 90 cents per diluted share down from 99 cents a year earlier. Analysts polled by Capital IQ expected $1.10. So Wynn is telling us specifically how much should they make in third quarter per share, how is that different from a year earlier, and then we see from the Newswire, what is it that analysts had expected? We've got operating revenues, 1.69 billion up from 1.67 billion a year earlier. And so we see, obviously, revenues are growing, but their earnings are shrinking, at least on a per share basis. How is that possible? Well, we don't know exactly. We could go back and kind of look at the data, but it's likely that their expenses are up and so net income is compressed, and possibly, their share count is up. But the other nice thing is we can go through and we get a transcript of what's happening with the firm. In particular, FactSet and many other platforms provide a transcript of the earnings call. And in particular, the earnings call is where company for Wynn hop on a conference call and tell analysts and investors what's going on with the business and kind of present those results in a PowerPoint-type presentation, and then they take questions from analysts and potentially investors afterwards. So this is a really great opportunity for investors to go through and learn what's really happening with the firm and how is its business performing over time. And again, this is done every 90 days or thereabouts. So you get very frequent updates from the firm related to its business. And that in turn helps us to go through and then understand, okay, what should the company stock be trading at? Is this $95.65 cents per share reasonable, or should it be something else? So we see as an example, in Wynn's case, their earnings disappointed a little bit. After hours, it is off by 3.37%. Now notice I said after hours, post-market. Earnings releases and other major company news are always done either before the market opens or after the market closes, unless somebody is screwed up once in a while. And by once in a while, I mean like once or twice a year for a company out of the several thousand that are publicly traded, someone will accidentally make an error and the earnings will get released during the market day. But for 99.9% of firms, and for 100% of firms doing this on purpose, earnings are going to be released either before the market opens at 9:30 in the morning, or they will be released after the market closes at 4:00 PM, and this is Eastern Time or New York time. So in this case, when released after the market closed, the market says, "Eh, it's not great. It's down about 3.5% or so after hours." Why is this done after hours or before hours? Well, this relates to an SEC rule called Reg FD, or Fair Disclosure, which basically, in a nutshell, says that information has to be made available to all investors at the same time. And so this enables the company to say, "Hey, everybody can take the time they need, figure out what's going on with the firm overnight, and then you come back in the morning and you can trade. We do have post-market trading, but it's very thin, there's not a lot of it that's done, and it's a relatively small amount of volume." So now you should have a better idea how companies use earnings reports and how investors can use those earnings reports and the releases to understand what's happening with a firm and to determine what the fair value of the company's stock is and what trading decisions they want to make, if any.