Most recent quarter, or MRQ, is a commonly used acronym in finance, and it relates to the previous quarter. MRQ is widely used in financial reporting, and it can be instrumental in highlighting a company’s financial results or operational metrics.
Additionally, MRQ figures and financial results give investors an overview of the company’s performance in the short term, which can help determine future stock prices or the company’s valuation.
Why MRQ is important
Companies are obligated to report their financial statements each quarter. Since the quarter ends and the results are published until the new quarter ends, there is no financial or operational information from the company.
Investors, analysts, and Wall Street, in general, put too much emphasis on short-term results and the current state of a company, so they extensively use the most recent information available. This is why MRQ is a common acronym used in financial reports, analysts, and company presentations.
Financial results or operational metrics in the short term can have a significant impact on stock prices and investors’ perception of a company. Therefore, MRQ is used to highlight improvements, but it can also be used for valuation when investors analyze a company’s financial statements.
Advantages and disadvantages of using MRQ
Using MRQ to assess a company’s financials and valuation metrics is very useful, as it allows investors to better understand the stock’s price action and narrative behind the trading.
Particularly when it comes to high-growth stocks, where the short-term results have a lot of impact on the stock’s momentum, the most recent quarterly results, and operational figures will be the main drivers of the stock price.
Because MRQ results and figures are solely based on the last three months the company reported, it can be a very short period of time to allow investors to draw conclusions. Several factors can influence short-term results, such as seasonality and cyclicality. Therefore, the results over just 3 months may not fully reflect the company’s results and operations.
Other factors might influence the company’s performance in the short term, and as such, investors should be aware of these shortcomings when evaluating MRQ results.
How to use MRQ in financial results and metrics
Financial results or operational metrics create a narrative behind stock prices. They also allow investors and analysts to understand whether a company’s metrics are improving.
Short-term results are beneficial when evaluating high-growth companies and understanding whether or not a company is staying in the growth course or what headwinds it might face.
Especially when there is no new information on the company until the current quarter ends, the most recent quarter's results remain the most updated figures and information available.
MRQ results and metrics should not be extensively used when valuing a company. This is because three months tend to be a very short period to draw any accurate conclusion, and valuing a business based on the most recent quarter will not accurately portray the company's value.
Valuing a company should be based on its expected growth and historical performance. Three months is too short of a timeframe to use as any solid basis for valuation.
One of the best ways to use the most recent quarter's results is trading. Stock prices are driven by information, and short-term price movements tend to be significantly influenced by the most recent news or data about a company.
This is why the most recent quarter results tend to drive stocks' narrative and price action. As a trader, understanding when the MRQ results of a company can drive its price either up or down can be very beneficial.
MRQ is far more helpful for analyzing financial results. While it refers to the last three months when the company reported its financials, it allows investors to draw some short-term conclusions about its performance.
Overall, MRQ results should tell you exactly how well the company operated in the past three months, and it can also be used to make projections and estimates. Using the results of the most recent quarter to track whether or not the company is achieving its estimates and evaluating whether or not the management is following through with their goals for the company.