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What is and when is the earning season? • Benzinga | Business Top stories

What is and when is the earning season? • Benzinga

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The exchange has several calendars which give it a particular rhythm as information is released to the public over time. This means that certain times of the year tend to exhibit higher price volatility for individual stocks and the market as a whole. One of the most important calendars for stocks is commonly referred to as the earnings season, which occurs on a quarterly basis when most corporate earnings reports are made public.

The earnings season can have a huge impact on both individual stocks and the market in general, as companies publish earnings which are then compared to average analyst expectations. Rapid price changes occur when published results differ significantly from expected results. Keep reading to learn more about how the earnings season affects individual stocks and the stock market.

What is the income season?

The earnings season consists of the period in each quarter when many publicly traded companies report their quarterly earnings to shareholders, market analysts, and the general public. Most companies do a quarterly report which is distributed to shareholders where they report their corporate earnings. These reports also typically include any other significant company news that may have arisen in the past quarter as well as profit forecasts for the quarter and the year ahead.

When a company announces its quarterly earnings, it typically hosts a meeting or conference call in which the company’s CEO and other company officials reveal the company’s progress – or lack thereof. progress – during the previous quarter.

Large companies usually plan and announce results meetings or conference calls in advance. Their CEOs then reveal the earnings information to shareholders and the general public at the agreed time. In particular, such press releases can change a company’s market price if they differ significantly from market expectations.

When is the income season?

The profit season in the US stock market typically begins 1 to 2 weeks after the end of the previous fiscal quarter and lasts about 4 to 6 weeks. While many companies publish their results soon after the end of the quarter, some companies publish their quarterly results up to 1 to 2 months after the end of the quarter.

Public companies typically post their earnings from early to mid-January, April, July, and October. While most businesses report profits on a normal quarterly schedule, the exact timing of earnings release depends on each company’s fiscal year, so release dates may vary.

Many companies hold a earnings conference call, which is a public conference in which company executives present the results to market analysts, shareholders and the general public. A company’s earnings conference call typically coincides with the release of its financial results in the form of a 10-Q report that is filed with the Securities and Exchange Commission (SEC) on a quarterly basis. These 10-Q reports are typically included in the company’s earnings press release and can also be obtained from the SEC’s EDGAR database.

Traders and investors have traditionally noted the unofficial start of the earnings season with the release of Alcoa Corp.‘s (NYSE: AA). Alcoa is the 8th largest aluminum producer in the world and has consistently reported profits in the 2nd week after the end of each quarter for decades.

Although no longer a stock in the Dow Jones Industrial Average 30, Alcoa continues to be a benchmark for US economic growth as its products are used by several different market segments. These include the automotive, construction, energy and consumer electronics sectors.

How does the earnings season affect investors?

In addition to containing detailed information about a company’s earnings, quarterly earnings releases contain key financial and performance metrics that could have a direct impact on a company’s profitability and share price. Profit reports also include various tables, figures, and graphs that explain how the company’s financial results were determined.

Important information to consider when evaluating a revenue report includes:

  • The results: The balance sheet shows the financial health of the business at a specific point in time and gives you an idea of ​​what the business owns, its debts and whether it can operate properly on its income. The balance sheet displays the total assets of a business, including cash, accounts receivable, inventory, and property; its total liabilities, including loans, accounts payable, bonds and other debts of the company; and its equity, the assets of the company less the liabilities.
  • The income statement: The income statement summarizes what the business earned and how much it spent during the quarter. Income consists of a business’s income (how much it made from sales during the reporting period) and its net income (how much money the business earned after expenses during that period).
  • The statement of cash flows: This statement shows how much money was received and how much was paid by the business during the quarter. Although less important than the balance sheet and income statement, the cash flow statement provides useful information about where a company’s money is coming from and how it is spent.

A company’s financial statements may also contain notes on items relevant to its quarterly profits. The notes could include important information about debts, expenses, income and the main risks of the business, such as lawsuits, currency risks and other market risks. You can search the company’s Form 10-Q online on the SEC’s website and search for “risk,” “inadequate fairness” and “pending lawsuit” for more information on unusual exposures it might. to have.

While long-term investors may not be much affected by short-term price movements caused by earnings releases, active short-term traders and investors often view earnings releases as opportunities to establish new ones. positions in company shares or liquidate existing ones.

For example, if a company reports profits that are significantly higher than expected, its stock price tends to rise. Conversely, missing analysts’ expectations by reporting lower-than-expected earnings can have a negative effect on the company’s stock price.

Keep in mind that even if a company reports excellent earnings that exceed analysts’ expectations, its stock price could fall further if the price has risen significantly in the days leading up to the announcement. A similar thing can happen if a company reports lower than expected earnings, causing its stock price to drop before the earnings date.

Such counterintuitive moves happen more often than you might think and it is generally believed that traders take positions prior to a rumor release and then take profits on the actual release. A famous market adage even advises traders to “buy the rumor, sell the fact”.

Basically, an expectation based on credible rumors of an earnings report that is significantly better or worse than that projected by market analysts can be discounted into the stock price prior to actual publication. If the profits are then in line with these rumored expectations, the stock will often retrace some of its pre-announcement gains or losses due to profit taking as traders adjust their speculative positions.

Benzinga’s Favorite Investment Calendars

Benzinga offers one of the most comprehensive sets of financial calendars covering the dates and times of publication of various types of financial information. In addition to an earnings calendar, you can also access an analyst rating calendar, conference call calendar, and investor orientation calendar, among other things.

Benzinga earnings schedule

Conclusion

Earnings season presents a notable opportunity for active traders and investors to take advantage of increased volatility in stock prices as many companies release their earnings reports.

The average and range of stock analysts’ estimates also provide an indication of what to expect in a company’s quarterly earnings report ahead of its release. Any deviation, whether above or below analysts’ consensus for quarterly earnings, will generally cause volatility in the company’s stock price which may provide short-term trading opportunities.

Long-term investors may not be significantly affected by quarterly earnings reports, although they can use earnings reports to discern longer-term trends in income and expense behavior. a company. Earnings reports can also motivate these investors to accumulate more stocks if the publication is favorable or to liquidate their position if the publication is disappointing.

Frequently Asked Questions

Why do they call it earnings season?

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Why do they call it earnings season?

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Jay and Julie Hawk

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The term earnings season is used by stock market professionals because many publicly traded companies report their results during this period, which typically begins 2 weeks after the end of each quarter and lasts 4-6 weeks thereafter.

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Benzinga

How do earnings affect stock prices?

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How do earnings affect stock prices?

demand

Jay and Julie Hawk

1

Profits represent the bottom line of a business. If a company shows a trend of consistently higher profits, its stock price tends to rise because it looks like a solid investment. Conversely, if a company’s profits decline or show a loss, the company’s stock price is more likely to fall as it becomes a riskier investment.

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Benzinga

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What is and when is the earning season? • Benzinga

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Eleon Lass

Eleanor - 28 years I have 5 years experience in journalism, and I care about news, celebrity news, technical news, as well as fashion, and was published in many international electronic magazines, and I live in Paris - France, and you can write to me: eleanor@newsportal365.com

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