# Detailed Workflow for Earnings Updates This document provides detailed step-by-step instructions for each phase of the earnings update process. ## ⚠️⚠️⚠️ CRITICAL WARNING: ALWAYS USE THE LATEST EARNINGS DATA ⚠️⚠️⚠️ **STOP AND READ THIS FIRST:** Training data is OUTDATED. Actively search for and retrieve the MOST RECENT earnings materials. Using outdated earnings data is the #1 mistake in earnings analysis. **BEFORE STARTING:** 1. **CHECK TODAY'S DATE** - Write down the current date 2. **SEARCH FOR LATEST** - Use web search to find the most recent earnings 3. **VERIFY THE DATE** - Confirm the earnings release is within the last 3 months 4. **IF OLDER THAN 3 MONTHS** - Wrong quarter obtained, search again ## Phase 1: Earnings Data Collection (30-60 minutes) ### Step 1: Identify the Latest Earnings Period **CRITICAL**: ALWAYS SEARCH FOR THE LATEST EARNINGS - DO NOT RELY ON KNOWLEDGE CUTOFF. **CRITICAL**: NEVER USE EARNINGS DATA FROM TRAINING - IT IS OUTDATED. **Step 1a: Search for Latest Earnings Release** **🚨 ACTIVELY SEARCH - training data is outdated. 🚨** **MANDATORY STEP 1: CHECK TODAY'S DATE** - **Write down today's date explicitly**: [Month] [Day], [Year] - **Use this to verify** that any earnings found are within 3 months - **Example**: "Today is October 29, 2024" **MANDATORY STEP 2: SEARCH FOR "LATEST EARNINGS"** - **Use web search** with queries like: - `[Company name] latest earnings results` - `[Company name] most recent quarterly earnings` - `[Ticker symbol] earnings latest quarter` - **OR search company investor relations site**: - Go to `investor.[company].com` or `[company].com/investors` - Navigate to "Press Releases", "News", or "Earnings" section - **Sort by date to find MOST RECENT release** - Look for keywords: "earnings", "results", "financial results", "quarterly results" **MANDATORY STEP 3: VERIFY THE RELEASE DATE** - **Look at the date of the earnings release found** - **Calculate**: Is this date within the last 3 months from today? - **If YES** → Proceed to next step - **If NO (older than 3 months)** → 🚨 WRONG QUARTER - Search again for more recent **❌ COMMON MISTAKES TO AVOID:** - ❌ Using earnings data from training without searching - ❌ Assuming "Q3 2024" is latest based on expectations - ❌ Grabbing the first earnings release found without checking the date - ❌ Not comparing the release date to today's date - ❌ Proceeding when the release is 4+ months old **✅ CORRECT APPROACH:** - ✅ Check today's date first - ✅ Search explicitly for "latest" or "most recent" - ✅ Read the actual release date on the materials - ✅ Confirm release date is within 3 months of today - ✅ If unsure, search again with different terms **MANDATORY STEP 4: IDENTIFY THE QUARTER** - **Read the title/headline** to identify the quarter (Q1, Q2, Q3, Q4 or fiscal quarter) - **Read the release date** on the document itself - **Verify both the quarter name AND the date are recent** 3. **Alternative search methods if IR site is unclear:** - Web search: `[Company name] latest earnings results` - Web search: `[Company name] most recent quarterly earnings` - Web search: `[Ticker symbol] earnings latest quarter` - SEC EDGAR: Search for company and look at most recent 10-Q or 10-K filing date **Example searches that find latest data:** - "Nike latest earnings results" → Returns most recent quarter reported - "AAPL most recent quarterly earnings" → Shows latest Apple earnings - "Tesla Q3 2024 earnings" → Results confirm Q3 2024 exists **Step 1b: Understand Company's Fiscal Calendar** After identifying the latest quarter from search, understand the company's fiscal year to interpret it correctly: **Common fiscal year patterns:** - **Calendar year (CY)**: Q1=Jan-Mar, Q2=Apr-Jun, Q3=Jul-Sep, Q4=Oct-Dec - **Nike fiscal**: Q1=Jun-Aug, Q2=Sep-Nov, Q3=Dec-Feb, Q4=Mar-May (May fiscal year-end) - **Apple fiscal**: Q1=Oct-Dec, Q2=Jan-Mar, Q3=Apr-Jun, Q4=Jul-Sep (September fiscal year-end) - **Walmart fiscal**: Q1=Feb-Apr, Q2=May-Jul, Q3=Aug-Oct, Q4=Nov-Jan (January fiscal year-end) Many companies state their fiscal year in the earnings release header. Search `[company] fiscal year calendar` if needed. **Step 1c: MANDATORY VERIFICATION - Verify Latest Data Obtained** 🛑 **STOP - DO NOT PROCEED until verifying ALL of these:** - [ ] ✅ **Today's date written down**: [Month] [Day], [Year] - [ ] ✅ **Actively searched** using "latest earnings" or "most recent earnings" - [ ] ✅ **Earnings release date found**: [Month] [Day], [Year] - [ ] ✅ **Verified release is within 3 months of today** (do the math!) - [ ] ✅ **Did NOT assume** the quarter based on today's date alone - [ ] ✅ **Can see the actual press release** confirming the quarter/period - [ ] ✅ **Opened and read** the actual earnings materials (not just assumed they exist) **🚨 RED FLAGS - If ANY of these are true, WRONG quarter obtained:** - 🚨 Release date is more than 90 days old - 🚨 Relying on expectations rather than what was FOUND by searching - 🚨 Have not actually SEEN a press release or filing confirming this quarter exists - 🚨 Used data from training without searching - 🚨 Cannot state the exact release date - 🚨 Release date found is from 2023 or earlier (when today is 2024+) **IF ANY RED FLAGS PRESENT**: STOP and search again. Do not proceed with outdated data. **Step 1c: Handle Naming Variations** Companies use different terminology - recognize these patterns: **Quarter terminology:** - "Q1 2024", "Q1 FY24", "First Quarter 2024", "1Q24" - "Third Quarter Fiscal 2024", "Q3 FY2024", "3Q FY24" **Earnings release titles:** - "[Company] Reports Q3 2024 Results" - "[Company] Announces Third Quarter Fiscal 2024 Financial Results" - "[Company] Q3 Revenue Grew 15% Year-over-Year" **SEC filing searches:** - Company name may differ from common name (e.g., "Meta Platforms, Inc." vs "Facebook") - Search by ticker symbol to find filings reliably - Look for most recent 10-Q (quarterly) or 10-K (annual if Q4) ### Step 2: Gather Earnings Materials After SEARCHING FOR and confirming the latest quarter, collect the following: **⚠️ IMPORTANT: SEARCH for and ACCESS actual documents - do not rely on training data.** **Primary Materials (REQUIRED):** - **Earnings press release** - Usually on company investor relations site under "Press Releases" or "News" - Navigate to IR site and find the actual press release - Search patterns: "[Company name] latest earnings", "[Company name] Q[X] [Year] earnings results" - Look for PDF or HTML version - **Verify the date matches what was found in Step 1** (should be within last 1-3 months) - **Read the actual document** to confirm the quarter and get reported numbers - **10-Q or 10-K filing** - On SEC EDGAR (sec.gov/edgar/searchedgar/companysearch.html) - Search by ticker symbol - For quarters 1-3: Look for most recent 10-Q - For Q4: Look for 10-K (annual report) - Note: May be filed 1-5 days after earnings release - Direct link format: `https://www.sec.gov/cgi-bin/viewer?accession=[accession-number]` - **Earnings call transcript** - 🚨 **VERIFY THE DATE ON THE TRANSCRIPT** 🚨 - **Search for**: "[Company] latest earnings call transcript" or "[Company] Q[X] [Year] earnings call transcript" - **Sources**: - Company IR site (some post transcripts directly) - Seeking Alpha: Search "[Company] [latest quarter] earnings call transcript" - AlphaStreet, Motley Fool (alternative sources) - **CRITICAL DATE CHECK**: - ✅ **Before using ANY transcript, verify the date on the transcript itself** - ✅ **The transcript date MUST match the earnings release date from Step 1** - ✅ **If transcript says "Q2 2023" but release was "Q3 2024", WRONG transcript obtained** - 🚨 **Common mistake**: Grabbing an old transcript without checking the date - If transcript not yet available, listen to webcast replay or note to wait for transcript **Supplemental Materials (if available):** - **Investor presentation/slides** - Often posted on IR site alongside press release - Usually titled "Q[X] [Year] Earnings Presentation" or "Investor Presentation" - PDF format with slides management presented during earnings call - **Supplemental data file** - Some companies provide Excel files with detailed metrics - Look for "Supplemental Financial Information" or "Investor Data Sheet" **Reference Materials (for comparison):** - **Prior quarter results** - For QoQ comparison - From prior quarter's earnings release (90 days ago) - **Prior year same quarter** - For YoY comparison - From same quarter last year (4 quarters ago) - **Prior estimates** - If this company was previously covered - From last earnings update or initiation report - Check what was estimated for this quarter's metrics - **Consensus estimates** - From Bloomberg, FactSet, Refinitiv, or Yahoo Finance - CRITICAL: Use estimates from BEFORE earnings release - Look for "as of [date before earnings]" to ensure pre-announcement consensus - Needed for beat/miss analysis **🛑 MANDATORY VERIFICATION before proceeding to Step 3:** **DATES - Verify ALL dates match:** - [ ] ✅ **Today's date written down**: _______________ - [ ] ✅ **Earnings release date**: _______________ (MUST be within 3 months of today) - [ ] ✅ **Earnings call transcript date**: _______________ (MUST match release date ±1 day) - [ ] ✅ **10-Q/10-K filing date**: _______________ (MUST be same quarter as release) - [ ] ✅ **ALL materials show SAME quarter** (e.g., all say "Q3 2024", not mixed quarters) **SEARCH & ACCESS - Verify active search completed:** - [ ] ✅ **SEARCHED** for "latest earnings" (not assumed based on current date) - [ ] ✅ **ACCESSED** actual earnings press release and read it - [ ] ✅ **OPENED** actual earnings call transcript and verified date - [ ] ✅ **CONFIRMED** this is the MOST RECENT quarter by checking dates - [ ] ✅ Have full financial results (revenue, EPS, margins, etc.) from actual release - [ ] ✅ Have pre-earnings consensus estimates with source date **🚨 RED FLAGS - STOP if ANY of these are true:** - 🚨 Did NOT actually search for or access the earnings materials - 🚨 Working from memory or training data instead of current documents - 🚨 The earnings release date is more than 90 days old - 🚨 Cannot state the EXACT DATE of the earnings release - 🚨 The transcript date does NOT match the release date - 🚨 Materials show different quarters (e.g., release says Q3 but transcript says Q2) - 🚨 Grabbed the first result without verifying the date ### Step 3: Extract Key Metrics Create a structured summary: ``` REPORTED RESULTS vs. ESTIMATES: ───────────────────────────────────────────────── Reported Our Est Consensus Beat/(Miss) Revenue $X,XXX $X,XXX $X,XXX $XX (X%) Gross Margin XX.X% XX.X% XX.X% XXbps EBITDA $XXX $XXX $XXX $XX (X%) Operating Profit $XXX $XXX $XXX $XX (X%) EPS (Adjusted) $X.XX $X.XX $X.XX $X.XX EPS (GAAP) $X.XX $X.XX $X.XX $X.XX KEY BUSINESS METRICS: ───────────────────────────────────────────────── [Metric 1] XXX XXX XXX +X% YoY [Metric 2] XXX XXX XXX +X% YoY [Metric 3] XXX XXX XXX +X% YoY ``` ### Step 4: Identify Key Themes from Call Listen to or read earnings call transcript and note: - Management's tone (confident, cautious, defensive?) - Key topics emphasized (product launches, geographic trends, competition) - Questions from analysts (what are investors concerned about?) - Guidance provided (raised, lowered, maintained, introduced?) - Any surprises or unexpected commentary ## Phase 2: Analysis (2-3 hours) ### Step 5: Beat/Miss Analysis For EACH key metric that beat or missed, explain: **If BEAT:** - What drove the outperformance? - Was it one-time or sustainable? - Did management guide higher going forward? - How does this impact our thesis? **If MISS:** - What went wrong? - Was it company-specific or industry-wide? - Is management taking corrective action? - How does this impact our thesis? **Example Format:** ``` ■ **Revenue Beat by 3% Driven by Strong DTC Performance** Revenue of $13.5B exceeded our estimate of $13.1B by $400M (3%) and consensus of $13.2B by $300M (2%). The outperformance was driven primarily by Direct-to- Consumer channels, which grew 18% YoY (vs. our 12% estimate), offsetting weaker-than-expected wholesale (-5% vs. flat estimate). Management cited strong digital demand and successful product launches (Pegasus 40 running shoe, new Jordan colorways) as key drivers. DTC now represents 42% of total revenue vs. 38% a year ago, demonstrating successful channel shift strategy. ``` ### Step 6: Segment/Geographic/Product Analysis Analyze performance by: - Business segment (if multi-segment company) - Geography (North America, Europe, China, etc.) - Product category - Channel (retail, wholesale, e-commerce) Identify: - What outperformed expectations? - What underperformed? - Trends vs. prior quarters - Management commentary on outlook for each area ### Step 7: Margin Analysis Analyze profitability: - Gross margin: up or down? why? - Operating margin: up or down? why? - Key drivers (pricing, mix, costs, leverage) - Outlook going forward ### Step 8: Guidance Analysis If company provided guidance: - Compare new guidance to prior guidance - Compare to internal estimates and Street estimates - Assess credibility (does company have track record of sandbagging? beating?) - Identify key assumptions behind guidance If company did NOT provide guidance: - Note this explicitly - Provide independent outlook based on results and commentary ### Step 9: Update Financial Model Update estimates for: - Current year (remaining quarters) - Next year - Potentially year after **Show clearly:** ``` UPDATED ESTIMATES: ───────────────────────────────────────────────── Old Est New Est Change Reason FY2024E Revenue $XX.XB $XX.XB +X.X% [Brief reason] FY2024E EBITDA $X.XB $X.XB +X.X% [Brief reason] FY2024E EPS $X.XX $X.XX +X.X% [Brief reason] FY2025E Revenue $XX.XB $XX.XB +X.X% [Brief reason] FY2025E EBITDA $X.XB $X.XB +X.X% [Brief reason] FY2025E EPS $X.XX $X.XX +X.X% [Brief reason] ``` ### Step 10: Update Valuation & Price Target Based on updated estimates: - Recalculate DCF (use updated cash flows) - Update comparable company multiples (if peer group has reported) - Determine new fair value - Decide if price target changes **Price Target Decision:** - If estimates changed significantly (>5%) → Usually change price target - If estimates changed marginally (<5%) → May maintain price target - If thesis strengthened/weakened → May change even without estimate change ### Step 11: Assess Rating Impact Decide whether to change rating: - If results significantly better than expected + guidance raised → Consider upgrade - If results significantly worse + guidance cut → Consider downgrade - If inline or mixed → Usually maintain rating **Consider:** - Stock reaction (up/down/flat?) - Valuation (expensive/cheap relative to new estimates?) - Risk/reward (asymmetry shifted?) ## Phase 3: Chart Generation (1-2 hours) ### Step 12: Generate 8-12 Charts Create charts focusing on QUARTERLY TRENDS and WHAT'S NEW. **REQUIRED CHARTS (8-12 total):** 1. **Quarterly Revenue Progression** (Bar chart) - Last 8-12 quarters - Show beat/miss vs. estimates each quarter - Highlight current quarter 2. **Quarterly EPS Progression** (Bar chart) - Last 8-12 quarters - Show beat/miss vs. estimates - Adjusted and GAAP 3. **Quarterly Margin Trend** (Line chart) - Gross margin, EBIT margin, net margin - Last 8-12 quarters - Show trajectory 4. **Revenue by Segment/Geography** (Stacked bar OR table) - Current quarter vs. YoY - Growth rates by segment 5. **Key Operating Metrics** (Multi-line chart) - Customer count, ARPU, units sold, etc. (whatever is relevant) - Last 8-12 quarters 6. **Beat/Miss Summary** (Waterfall or table) - Show components of beat/miss - What drove variance from estimates 7. **Estimate Revision Chart** (Before/after comparison) - Old FY estimates vs. new FY estimates - Bar chart showing change 8. **Valuation Chart** (P/E or EV/EBITDA multiple) - Historical multiple range - Current multiple - Fair value multiple **OPTIONAL CHARTS (if space allows):** - Peer comparison (if peers have reported) - Guidance vs. Street comparison - Cash flow metrics - Balance sheet highlights (if notable) **Chart Style Guidelines:** - Focus on TRENDS (quarterly progression) - Highlight CHANGES (beat/miss, estimate revisions) - Keep simple and clear (this is a fast-turnaround report) ## Phase 4: Report Creation (2-3 hours) ### Step 13: Create DOCX Report Use DOCX skill to create 8-12 page report. See [report-structure.md](report-structure.md) for complete page-by-page templates and formatting requirements. **Key Steps:** 1. Create Page 1 with earnings summary and quick takeaways 2. Add detailed results analysis (Pages 2-3) 3. Include key metrics and guidance (Pages 4-5) 4. Update investment thesis (Pages 6-7) 5. Provide valuation and estimates (Pages 8-10) 6. Add appendix if needed (Pages 11-12) 7. Embed all 8-12 charts throughout 8. Add 1-3 summary tables 9. Include complete sources section with clickable hyperlinks ### Step 14: Optional - Update XLS Model If a full financial model exists for this company (from initiation), update it with: - Actual Q[X] results - Revised estimates for future quarters - Updated valuation **Note**: For earnings updates, a full XLS file is OPTIONAL (not required like in initiation reports). The DOCX report is the primary deliverable. If creating XLS, include: - Quarterly model tab - Updated annual projections - Revised DCF - Updated comps analysis ## Phase 5: Quality Check & Delivery (30 minutes) ### Step 15: Quality Checklist Before publishing, verify: **Content:** - [ ] Beat/miss clearly stated and quantified - [ ] Key drivers explained (not just "strong performance") - [ ] Updated estimates provided (old vs. new shown) - [ ] Price target updated or explicitly maintained - [ ] Rating confirmed or changed with rationale - [ ] Guidance analyzed (if provided) - [ ] Thesis impact assessed **Formatting:** - [ ] Page 1 has summary box and key bullets - [ ] All tables have source lines - [ ] All figures numbered and captioned - [ ] Estimates table shows old vs. new - [ ] 8-12 charts embedded throughout - [ ] Report is 8-12 pages (not too long, not too short) **Accuracy:** - [ ] Numbers match company's reported results exactly - [ ] Math checks out (estimates, valuation) - [ ] No typos in ticker, company name, numbers - [ ] Charts match text descriptions - [ ] Date is current **Citations:** ⭐ MANDATORY - [ ] Every figure has specific source with document and date - [ ] Every table has specific source with document reference - [ ] Beat/miss analysis cites consensus source with date - [ ] Guidance changes cite current and prior guidance sources - [ ] Key statistics have footnotes with specific page/slide references - [ ] Sources section lists all materials with URLs - [ ] ALL URLs are CLICKABLE HYPERLINKS (not plain text) - [ ] Hyperlinks tested and working (Ctrl+Click opens correct page) - [ ] All SEC filings hyperlinked to EDGAR viewer - [ ] All earnings materials hyperlinked (release, transcript, presentation) - [ ] Prior guidance hyperlinked to prior quarter's materials - [ ] No raw URLs displayed - all formatted as clickable links - [ ] Earnings call quotes cite specific speaker and approximate timestamp **Timeliness:** - [ ] Report published within 24-48 hours of earnings release - [ ] All data is from LATEST quarter - [ ] Consensus estimates are pre-earnings (not post-earnings) ### Step 16: Deliver Report Provide user with: 1. **DOCX file**: `[Company]_Q[X]_[Year]_Earnings_Update.docx` 2. **Chart files**: All PNG/JPG charts (for reference) 3. **Optional XLS**: Updated financial model if maintained **Brief summary for user:** ``` [Company] Q[X] [Year] Earnings Update Complete Results: [BEAT / INLINE / MISS] - Revenue: $X.XB ([beat/missed] by $XXM or X%) - EPS: $X.XX ([beat/missed] by $X.XX) Key Takeaways: ■ [Takeaway 1] ■ [Takeaway 2] ■ [Takeaway 3] Updated Estimates: - FY[Year]E Revenue: $XX.XB (prior: $XX.XB, [+/-]X%) - FY[Year]E EPS: $X.XX (prior: $X.XX, [+/-]X%) Rating: [MAINTAINED / RAISED / LOWERED] [RATING] Price Target: $XXX (prior: $XXX) - [+/-]XX% upside Deliverable: 8-12 page earnings update report with updated estimates and valuation. ```