Earnings Season & What to Look For

When Do Companies Report?

Publicly traded companies in the United States typically report their financial results on a quarterly basis, four times a year, with each earning season beginning a couple of weeks after the end of every quarter. This results in reporting seasons around the middle of January, April, July and October, with the vast majority of companies usually reporting within the first six weeks.

Major US Banks are generally among the first big names to report and as such, are the ones that are seen as unofficially kicking-off the earnings season. These dates however are not written in stone.

Outside the United States, reporting seasons are probably a bit more complicated, since many companies only report twice a year, releasing financial results for Half-Year and Full-Year, while others may also provide quarterly trading updates.

The earnings results are usually released either before the relevant stock market opens, or after it closes, although there are firms that report during trade hours. Big tech firms in the Unites States for example, tend to publish their results after market close.

Majority of companies also hold earnings calls to discuss their financial results, which usually happens on the same day as the release.

What to Look For?

The figures that usually draw the headlines are Revenues and Earnings/share. These are compared against analysts estimates and also against the relevant readings from prior periods – most often the previous quarter or the same quarter of the previous year.

Of course there other metrics that markets look into, such as Profits, Margins and more, while their gravity can change from time to time. For instance, investors may focus more on margins, during periods of high inflation and high wages, compared to periods that such conditions eclipse.

The performance of specific segments or sub-segments of a company may also be important. As an example, the Cloud business is usually closely watched, when firm such as Amazon, Microsoft and Alphabet report.

Furthermore, there may be metrics that are important based on the sector and activity of a specific firm. When looking at companies such as Netflix, or Disney, the number of subscribers they add on their streaming services every quarter, is a very important metric.

Many companies also offer forward guidance, meaning their projection on key metrics for the next quarter or year, which is closely watched by analysts and can have an impact on the stock.

During the first reporting season of 2022 for example, Netflix provided solid quarterly financial results, but its guidance for subscriber growth in the next quarter, disappointed investors and caused its stock to plunge.

Conclusion

The earnings seasons are very important as they allow traders to gauge the financial health of the reporting companies and help them shape their predictions of the stocks future value.

These financial reports can potentially cause volatility and produce price jumps and market gaps, so trading with high caution is warranted during the earnings seasons.

Nikos Tzabouras

Senior Market Specialist

Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. He has a long time presence at FXCM, as he joined the company in 2011. He has served from multiple positions, but specializes in financial market analysis and commentary.

With his educational background in international relations, he emphasizes not only on Technical Analysis but also in Fundamental Analysis and Geopolitics – which have been having increasing impact on financial markets. He has longtime experience in market analysis and as a host of educational trading courses via online and in-person sessions and conferences.

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