Master the Art of Fundamental Analysis With InvestingPro: Earnings Growth

investing.com:

Investors often have unique motivations behind their stock choices, and some examples include:

While these reasons may seem valid on a personal level, they don't provide insights into whether these are sound investment choices.

It's important to realize that, in the medium to long term, as investors, the stock market is primarily driven by two significant factors:

Specifically, earnings contribute about 65-70% of the total, with dividends making up the remaining portion.

While various other analyses can be conducted, even seasoned investors like Peter Lynch have repeatedly emphasized that, in the grand scheme of things, consistent earnings growth is the most critical factor.

With this understanding in mind, let's explore where and how we can access this crucial information, and this is where InvestingPro becomes valuable.

InvestingPro offers different sections that provide comprehensive insights for any company.

For example, you can select the financials tab and read up-to-date balance sheets and income statements for any company.

You can also go to the charts tab and see how the key financial metrics have trended over a certain time span.

In the images below, we can see the balance sheet and income statement for Apple (NASDAQ:AAPL):

An analysis of the first image reveals an ideal earnings per share trend, characterized by consistent growth (as shown in Pic 1).

Conversely, in the context of the second image, it is evident that earnings frequently move in tandem with stock prices. However, when occasional situations arise, typically in the short term, where earnings show an upward trajectory while prices experience a decline — commonly referred to as divergence.

This scenario becomes particularly intriguing and warrants