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Earnings forecasts

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fressa
Regular Contributor
Hi Im trying to understand why analysts focus so much attention to companies earnings. Why is EPS such a popular measure of financial performance? Surely there are many limitations inherent in it?
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6 REPLIES 6
Rams
Super Contributor
it goes to the heart of profitability...
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fressa
Regular Contributor
Thanks rams, but arnt there significant limitations (eg capital structure, flexible accounting policies) that if not taken into consideration can give a skewed interpretation of the figures?
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koos2
Super Contributor
Would the growth or not of those earnings not be important ueber alles?
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Bouwer
Super Contributor
Well I think it is a easy way to evaluate a company before you delve deeper.. 99.9% of the time I wouldn't even look at a company with negative PE ratio to start with.
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gamma
Contributor
That's where earnings quality comes into the picture ...
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Rams
Super Contributor
that would reflect on the price...
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