Transcripts, press releases, and presentations on company earnings are one of three main places where investors can get information on what’s happened, what’s happening, and what’s expected. The other two areas that investors can look at are the annual reports and quarterly reports filed to the SEC (U.S. Securities and Exchange Commission).
Improvement in earnings
Teekay Tankers Ltd. (TNK), which is part of the Guggenheim Shipping ETF (SEA) and operates mid- and plus-size crude tankers and long-range product tankers, reported its third quarter 2013 earnings on November 7. Earnings for the third quarter on a basic basis, which doesn’t account for possible increases in the number of shares via existing options, came in at -$0.05 a share—better than the second quarter’s -$0.08.
Diluted EPS and adjustments
Based on diluted EPS (earnings per share) adjusted for one-time items or losses and gains that aren’t core to the company’s operation, diluted EPS came in at -$0.024 a share. This third quarter’s results were a significant improvement from the third quarter in 2012 and from the second quarter of this year.
Analysts often adjust for gains and losses from hedging activities and exclude one-time items to get a clearer picture of how the main business is performing. Plus, because accounts like derivative gains are difficult to forecast, this approach makes it easier to compare estimates. Compared to analysts’ average estimated loss of $0.08 a share, TNK’s earnings came in above expectations.
Seasonality and year-over-year changes
To adjust for seasonality, analysts often compare earnings between years. Indeed, these third quarter results came in better than the third quarter in 2012. Although year-over-year growth is often used, it isn’t that meaningful in this case because earnings have been negative for quite some time. This also applies to other crude tankers, like Frontline Ltd. (FRO), Nordic American Tanker Ltd. (NAT), and Tsakos Energy Navigation Ltd. (TNP).