In the latest quarterly earning report, if revenue exceeds the expectation by 10%, but EPS is lower than the estimated EPS by 10%, is this a good or bad news for the stock?

If the increase in general and administrative expenses causes the decreases in the net income/EPS. Is this a big concern?

2 Answers 2


Because of the gaming that goes on with earnings estimates and 'beating' estimates, it's hard to say what an amateur investor should make of it all.

That said, you can look in the MD&A section of the quarterly report and read the earnings call transcript to see management's explanation of their revenue 'beat' and earnings 'miss'.


It could be either. Higher revenue is certainly good in general, but not if it is due to (proportionally) higher expenses, which would result in a lower EPS. However, those higher expenses could be non-recurring due to some unexpected market condition that caused, say, a writedown of asset values unrelated to revenue.

None of these indicators can be taken and judged individually. If both are higher that's more likely a good sign, and vice-versa. If they move in opposite directions, then more research is warranted to understand the reasons why they are in opposition.

  • I just compared the latest financial report with the previous financial report. The increase in general and administrative expenses causes the decreases in the net income. Is this a big concern? Mar 11, 2021 at 22:11
  • It could be - G&A is the overhead of the company but contains lots of categories. Maybe they have hired up a lot of staff in anticipation of growth that hasn't fully happened yet? Or are they leasing a lot of office space? So it depends on exactly where the increase is and why it increased. If they increased it in anticipation of growth, that's a bit of a risk.
    – D Stanley
    Mar 11, 2021 at 22:15

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