FY 19 Q3 Results are getting published nowadays and the analysts will be busy analyzing results during the whole month of January 2019 and sometime during February 2019. All the listed companies are required to publish their quarterly results and annual results within the time frame set by SEBI.
Why results are to be published regularly? Companies are required to publish results so that the existing and proposed investors will be able to see the financial performance of the company during the particular quarter. Quarterly result will contain financial data for the previous quarter and corresponding quarter of last year also. Hence the public can compare the performance of the current year quarter results with that of previous year same quarter also (YoY) and also the result can be compared with current year previous quarter also (QoQ).
For short term traders, QoQ will be the driver. If the company declares good sales and profit in the current quarter compared to the previous quarter, the price might move in the near term. For long term investors, YoY will be important. If the company declares good growth in top line (Sales) and bottom line (Net Profit) over the same quarter last year, this company is desirable for long term. Since the company grows over last year same period, it is expected that the company will declare good results for the current financial year and the company’s growth over the year is a deciding factor for long term investors.
It is because the long term investors are concerned about the growth of the company over the period whereas the short term traders (say 1 – 2 months) will try to make money from the short term fluctuation. Sometime the company may declare good result YoY but the current quarter result might be little less than the previous quarter. In this case, the share of the company might come down for short term and the investors can grab if the long term drivers are intact. Hence it is important to consider the intention of the buyer – short term trading in price fluctuation or want to hold the share for reasonably long term (more than a year). Hence review the results before you enter in to the shares.
For example, Nestle published good results for the quarter ending September 2018 and the share price is growing steadily. The share price of Nestle is near to its 52 week high of Rs.11,705 and if the December 2018 results are good it is expected to reach new high. (Nestle is mentioned in this article as a reference and is not a buy suggestion).