<h2>Earnings</h2>
<p>Earnings, also known as company profits, represent the net income of a business after all expenses have been deducted from its revenues. In the context of trading, earnings are crucial as they can significantly impact the price of a company's shares. Traders closely monitor earnings reports to make informed decisions about buying or selling stocks.</p>

<h2>How It Works</h2>
<p>Companies calculate earnings using the following formula:</p>
<table>
<tbody>
<tr>
<th>Earnings = Total Revenue - Total Expenses</th>
</tr>
</tbody>
</table>
<p>Earnings can be reported on a quarterly or annual basis. The earnings per share (EPS) metric, which divides earnings by the number of outstanding shares, is commonly used to compare a company's performance over time or against other companies in its industry.</p>
<p>Earnings seasons, typically occurring four times a year, are periods when many companies release their quarterly earnings reports. These reports can cause significant market volatility as traders react to the actual earnings figures compared to the expected ones.</p>

<h2>Why It Matters for Traders</h2>
<p>Earnings are vital for traders for several reasons:</p>
<ul>
<li><strong>Price Movement</strong>: Earnings reports can cause significant price movements in a company's shares. If a company reports better-than-expected earnings, its stock price may increase. Conversely, if earnings are disappointing, the stock price may decrease.</li>
<li><strong>Fundamental Analysis</strong>: Earnings provide valuable insights into a company's financial health and performance. Traders use this information to make informed decisions about whether to buy, sell, or hold a stock.</li>
<li><strong>Market Sentiment</strong>: Earnings seasons can influence overall market sentiment. A high number of positive earnings surprises can boost market confidence, while many disappointments can lead to a market downturn.</li>
</ul>

<h2>Example</h2>
<p>Let's consider a tech company, TechCorp, with the following financials:</p>
<table>
<tbody>
<tr>
<th>Total Revenue</th>
<th>Total Expenses</th>
<th>Number of Outstanding Shares</th>
</tr>
<tr>
<td>$100 million</td>
<td>$70 million</td>
<td>10 million</td>
</tr>
</tbody>
</table>
<p>TechCorp's earnings would be $30 million ($100 million - $70 million). The EPS would be $3 ($30 million / 10 million shares). If analysts expected EPS to be $2.80, TechCorp's earnings beat expectations, which could lead to an increase in its stock price.</p>

<h2>Key Takeaways</h2>
<ul>
<li>Earnings represent a company's net income after all expenses have been deducted from its revenues.</li>
<li>Earnings reports can cause significant price movements in a company's shares.</li>
<li>Traders use earnings information for fundamental analysis and to make informed trading decisions.</li>
<li>Earnings seasons can influence overall market sentiment.</li>
</ul>