Which elements of the call matter most?
When IROs assess the success of an earnings call, the quality of analyst notes is considered the most important factor, followed by how prepared the firm is for addressing questions during the call. When asked to rank six factors in assessing success, quality of analyst notes is ranked as the most important factor by more than a third of IROs, while preparedness for analyst questions is ranked top by 29 percent.
Stock price performance is considered more important than management satisfaction in earnings calls when assessing their success. The two factors of least importance to IR professionals are quality of callbacks and media coverage.
The most important factor for investors in evaluating earnings calls is the extent to which the prepared remarks provide a business update, closely followed by the quality of answers provided to analyst questions.
When asked to rank five factors in order of importance, providing a business update is ranked highest by four in 10 investors, while three in 10 rank quality of answers highest. Both factors are in the top two ranks for 57 percent of investors.
The confidence of management in its messaging is the next-most important factor for investors in evaluating earnings calls. The least relevant factor for investors is the provision of a macroeconomic briefing in the calls.
When investors were asked what common mistakes companies can make in their earnings call, they gave a diverse range of answers. These include too much time spent on prepared remarks, focusing on the wrong measurements and not giving investors enough time before and during the call.
Below is a selection of comments from investors on what they consider to be useful practice in earnings calls.
