What are "earnings" and why are they important?

Earnings (also called profits) are the money a company makes after paying all its expenses. They're important because they show if a business is actually making money. When a company has strong earnings growth, it means they're increasing their profits over time, which often leads to higher stock prices. Investors pay close attention to earnings reports to judge a company's financial health and future prospects.

What does "beating EPS forecasts" mean?

EPS stands for Earnings Per Share, which is a company's profit divided by its outstanding shares of stock. When a company "beats EPS forecasts," it means they reported higher earnings than what financial analysts predicted. For example, if analysts expected a company to report $1.00 per share but they actually report $1.08, that's an 8% beat. This is generally seen as positive since it suggests the company is performing better than expected.

What are tariffs and how do they affect stocks?

Tariffs are taxes imposed on imported goods from specific countries. They can increase costs for companies that buy materials or products from overseas, potentially reducing their profits. This can then hurt their stock price. However, companies with strong "pricing power" (ability to raise prices without losing customers) or those less dependent on international trade can better manage these challenges, which is a key focus of this stock group.

What does "recurring revenue" mean for a company?

Recurring revenue is predictable income that a company can count on receiving regularly, like subscription fees. Companies with strong recurring revenue (like Microsoft with Office 365 subscriptions or Adobe with Creative Cloud) tend to have more stable and predictable earnings. This makes them potentially less vulnerable to economic uncertainties since their customers are committed to ongoing payments rather than one-time purchases.

What is "margin optimization" and why does it matter?

Margin optimization refers to a company's efforts to increase its profit margins—the percentage of revenue that becomes profit. Companies can do this by raising prices, reducing costs, or becoming more efficient. When a company successfully optimizes margins (like PBR mentioned in this group), it means they're squeezing more profit from each dollar of sales. This is particularly valuable during challenging economic times, as it can help maintain earnings even if sales growth slows.

15 handpicked stocks

Earnings Over Headwinds

A carefully selected collection of companies showing exceptional earnings growth despite market challenges. These stocks were handpicked by our analysts for their ability to maintain strong performance even when facing trade tensions and economic uncertainty.

Han Tan | Market Analyst

Updated 2 days ago | Published at जुलाई 2