Profit Changes in a company's profit (or loss) tend to grab the headlines when its results are announced. However, there are various accounting tricks that directors use to present profits in the best possible light, such as excluding tax, exceptional items and goodwill amortisation. So you need to look beyond the headline figure.
Earnings per share A huge profit might look impressive, but it won't make shareholders rich if it has to be shared out among a large number of shareholders. The earnings per share figure puts profits into perspective. It also determines a stock's P-E ratio – one of the key measures in determining whether a stock is worth buying.
Dividends per share Normally a company retains most of its earnings for reinvestment, but pays some out as a dividend to shareholders. The amount paid usually rises steadily year by year – sudden jumps in dividend per share are unusual. But so are sudden drops – if a company cuts its dividend, the chances are it is in trouble.
City reaction Analysts usually try and predict what a company's annual results will say before the news is announced. If the results beat analysts' expectations, the share price will rise; if they fall short, the share price will drop. Watch out for analysts upgrading or downgrading a stock, such as from "buy" to "hold" or vice versa.