Earnings are perhaps the most important factor that affects a stock’s price. They are reports that detail the profit or loss of a company for the last quarter, in terms of earnings per share, or how much a company made for every share outstanding. For example, if a company’s profits after expenses are $100 and they have 20 shares outstanding, the earnings per share are $5 (or $100 / 20 shares).

Public companies (any company that issues stock in the open market is public) must report earnings every quarter, or every three months. Quarters typically end in March, June, September, and December.

Since most companies follow the same schedule, the point at which earnings are reported is called earnings season. The people responsible for interpreting these reports for the general public are called analysts, and they typically make their buy and sell recommendations on the basis of earnings reports. This is why earnings are watched so closely. A good earnings report can do wonders for a company’s stock value, while a bad one can do just the opposite.

The numbers in earnings reports are typically anticipated, and if a company does better than the forecast, you will hear the term “beat earnings”. The opposite end of that is when a company “did not meet expectations”. This is usually pronounced in a somber voice, kind of like the one you would use to tell your child to study harder.