How to read a quarterly report: EPS, revenue and market reaction
Watch three numbers: earnings-per-share growth versus the same quarter last year, revenue growth, and the deviation from analysts' estimates. The market reacts not to the numbers but to their gap with expectations — which is why a good report is sometimes met with a drop.
Many businesses are seasonal: retail's fourth quarter always beats its first. So growth is measured year over year, not versus the previous quarter.
EPS growth of 15% → 25% → 40% over three quarters says more than a steady 30%: the business is gaining speed. Slowing growth often precedes a price decline.
Earnings above the estimate are a positive surprise. But the market also weighs the company's guidance: weak guidance can cancel a strong quarter.
A gap up on heavy volume means large buyers are revaluing the company. A gap down after good numbers means expectations were even higher.
- Apple (AAPL), Nov 2, 2026: EPS +14%, surprise +5.6%, stock on the day −1.9%
- Microsoft (MSFT), Oct 28, 2026: EPS +18%, surprise +3.6%, stock on the day −0.2%
- Google (GOOGL), Oct 28, 2026: EPS −26%, surprise −29.7%, stock on the day −12.6%
FAQ
What is EPS?
Earnings per share: net income divided by the number of shares.
Why did the stock fall after a good report?
Because the market expected more or was spooked by next-quarter guidance.
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