How to Read an Earnings Report: EPS, Guidance and Beats

Every quarter, thousands of public companies publish an earnings report, and every quarter the same thing happens: a stock jumps or slides within minutes, and many investors are left wondering why. Learning how to read an earnings report is one of the most useful skills a retail investor can build. You do not need an accounting degree. You need to know which numbers matter, what they are compared against, and where companies tell you what comes next.

This guide walks through an earnings release step by step, using Citigroup's third-quarter 2026 results, published October 13, as a real worked example.

Quick Picks: The Five Numbers to Check First

If you only have two minutes, look at these in order:

• Revenue (the top line): how much money the company brought in, and how fast it is growing.
• Earnings per share (EPS): profit divided by shares outstanding, the number most headlines compare to forecasts.
• Consensus estimates: what analysts expected, which tells you whether results were a beat or a miss.
• Margins: how much of each dollar of revenue the company keeps as profit.
• Guidance: what management expects for the next quarter or year, often the biggest driver of the stock's reaction.

What Is an Earnings Report?

An earnings report is a company's quarterly scorecard. In the US, public companies file quarterly reports (Form 10-Q) and annual reports (Form 10-K) with the Securities and Exchange Commission, and most also publish a shorter press release on results day, often filed as an exhibit to a Form 8-K. Foreign companies listed in the US, such as TSMC, file a Form 6-K instead.

According to the SEC's beginner's guide to financial statements, the full reports rest on four core statements:

• Balance sheet: what the company owns (assets) and owes (liabilities) at a single point in time, plus shareholders' equity.
• Income statement: revenue, costs and profit or loss over the quarter or year.
• Cash flow statement: cash moving in and out, split into operating, investing and financing activities.
• Statement of shareholders' equity: how the owners' stake changed over the period.

The press release pulls the headline figures from these statements and adds management commentary. That is where most investors start, and where we will start too.

Step 1: Start With Revenue

Revenue is the top line, the total amount the company earned from selling its products or services. The key question is growth. Companies usually show the change from the same quarter last year (year over year, or YoY) and sometimes from the previous quarter (quarter over quarter, or QoQ).

Year-over-year comparisons are usually the better guide, because many businesses are seasonal. A retailer's holiday quarter will always beat its spring quarter, so comparing Q4 to Q4 tells you more than Q4 to Q3.

Citigroup example: Citi reported third-quarter revenue of $23.8 billion, up 8% from a year earlier. CEO Jane Fraser called it the best third-quarter revenue in a decade. Revenue was down 4% from the second quarter, which is a good reminder to check both comparisons and to understand which one the company is highlighting.

Step 2: Find Net Income and EPS

Net income is the bottom line, the profit left after all costs, interest and taxes. Earnings per share divides that profit by the number of shares outstanding. The SEC describes EPS as roughly how much each share would receive if all of the period's earnings were paid out.

EPS matters because it adjusts for share count. CIBC's Investor's Edge guide points out that share buybacks can lift EPS even when total profit is flat, while issuing new stock can dilute it. You will usually see diluted EPS reported, which assumes stock options and convertible securities have been turned into shares.

Citigroup example: Citi earned $5.2 billion in net income, up 40% from a year earlier, and diluted EPS of $2.85, up 53%.

Step 3: Watch for One-Time Items

Those Citi growth rates look huge, but there is a catch worth learning from. In the same quarter last year, Citi recorded a $726 million goodwill impairment related to its plan to sell a stake in Banamex. That one-time charge made last year's profit look smaller, which makes this year's growth look bigger.

Citi's release shows both views. Excluding that item, EPS grew 27% rather than 53%. Still very solid, just less dramatic. This is why companies report adjusted or "excluding notable items" figures alongside reported numbers. Neither is the single truth. Read both, and make sure you understand what was excluded and why.

Step 4: Compare Results With Consensus Estimates

A company can grow profit by 25% and still see its stock fall, because markets react to results versus expectations, not results in isolation. Analysts publish forecasts for revenue and EPS, and the average is called the consensus estimate. CIBC notes that consensus is typically already reflected in the share price before the report.

• Beat: results above consensus.
• Miss: results below consensus.
• In line: results close to consensus.

Citigroup example: Finviz reported that Citi's EPS of $2.85 beat the $2.65 consensus by 20 cents, and revenue of $23.85 billion topped the $23.72 billion estimate. That is a clear beat on both lines, yet Finviz also noted the shares dipped about 1% before the market opened. A beat does not guarantee a rally, because investors are also weighing guidance, segment trends and what was already priced in.

Step 5: Check Margins and Segments

Margins show how efficiently a company turns revenue into profit. The SEC guide defines operating margin as operating income divided by net revenue. Higher and rising margins usually signal pricing power or good cost control.

Different industries report different efficiency measures. Banks, for example, often use an efficiency ratio (expenses divided by revenue, where lower is better) and return on tangible common equity (RoTCE). Chipmakers like TSMC emphasize gross margin.

Segment results show which parts of the business are driving growth. Citigroup example:

• Services: $6.6 billion in revenue, up 15%.
• Wealth: $3.3 billion, up 15%.
• Markets: $6.1 billion, up 6%.
• Banking: $1.7 billion, up 6%.
• Efficiency and returns: operating expenses fell 2% to about $14 billion, the efficiency ratio was 58.5%, and RoTCE rose 3.5 percentage points to 11.5%.

Two fast-growing segments plus falling expenses is the kind of combination analysts like to see, and Fraser highlighted "positive operating leverage," meaning revenue grew faster than costs.

Step 6: Read the Guidance and Outlook

Guidance is management's forecast for the coming quarter or year. Some companies give precise ranges, others offer broad direction. CIBC's guide notes that weaker-than-expected guidance can push a stock down even when current results are strong, because investors are always valuing the future.

Examples from this earnings season:

• Citigroup: Fraser said the bank expects to exceed this year's return target while accelerating investment toward an 11% to 13% RoTCE goal, with a longer-term aim of 14% to 15%.
• TSMC: on October 15 it guided fourth-quarter revenue to $52.3 billion to $54.3 billion, with gross margin of 65% to 67%. That kind of specific range makes it easy to judge next quarter's beat or miss.

Step 7: Look at Capital Returns and the Balance Sheet

Finally, check what the company is doing with its cash. Dividends and buybacks return money to shareholders, while a strong balance sheet gives a business room to invest through downturns. For banks, regulators focus on capital ratios like CET1, which measures high-quality capital against risk-weighted assets.

Citigroup example: Citi returned $4.1 billion through buybacks and dividends during the quarter, kept its CET1 ratio at 12.8%, and grew tangible book value per share 6% to $101.59.

What Is the Difference Between a 10-Q and an Earnings Release?

The earnings press release is the quick summary, written by the company and published on results day. The Form 10-Q is the full quarterly filing with the SEC, including complete financial statements, footnotes and a section called Management's Discussion and Analysis (MD&A). The SEC describes MD&A as management's own explanation of results, trends and risks, and footnotes as the place for details like accounting policies and tax breakdowns. If a number in the press release surprises you, the 10-Q is where to dig deeper.

Where Can I Find a Company's Earnings Report?

Start with the company's investor relations website, which usually hosts the press release, slide deck and a replay of the earnings call. Every US filing is also free on the SEC's EDGAR database, which is how we sourced the Citigroup and TSMC figures in this guide. Earnings calls are worth a listen too: the analyst question-and-answer session often reveals what Wall Street is most focused on.

Should I Buy or Sell a Stock Right After Earnings?

That is a personal decision, and this guide is not investment advice. What reading the report gives you is context. Instead of reacting to a headline, you can see whether growth came from the core business or a one-time item, whether margins are improving, and what management expects next. Prices can swing sharply in the hours after a release, and a single quarter rarely tells the whole story.

Putting It All Together

Here is the full checklist to keep next to your screen during earnings season:

• Revenue: growing year over year? Which segments drove it?
• EPS: reported and adjusted, and what was excluded?
• Consensus: beat, miss or in line on both revenue and EPS?
• Margins: expanding or shrinking?
• Guidance: raised, maintained or lowered?
• Capital: buybacks, dividends and balance-sheet strength.

Practice on a few reports and the format quickly becomes familiar. A good place to start is this season's bank and chip results, like the Goldman Sachs Q3 2026 earnings and ASML's record Q3 sales. For more market explainers and earnings coverage, visit our stock trading section.

This article is for educational purposes only and is not investment advice.

Sources: U.S. Securities and Exchange Commission, Beginners' Guide to Financial Statements — accessed October 15, 2026; CIBC Investor's Edge, How to read an earnings report — March 5, 2025; Citigroup, Third Quarter 2026 earnings release (SEC Form 8-K exhibit) — October 13, 2026; Finviz, Citigroup beats third-quarter earnings estimates as revenue reaches highest Q3 level in a decade — October 13, 2026; TSMC Form 6-K, Third Quarter 2026 earnings release (SEC) — October 15, 2026.