April 20, 2021 11:44 PM PDT
Earnings season provides a great opportunity for equity traders to
gain insight on stocks they have invested in, while also offering
context to potential share price moves. Read on for more on what
earnings season is, earning announcement dates to know, and what to look
for in an earnings report.To get more news about [url=https://www.wikifx.com/za_en/]WikiFX[/url], you can visit wikifx.com official website.
WHAT IS EARNINGS SEASON & WHY IS IT IMPORTANT？
Earnings season is a period each fiscal quarter, usually lasting
several weeks, where many of the largest listed companies announce their
latest financial accounts. An earnings report consists of revenue, net
income, earnings per share (EPS) and forward outlook, amongst a bevy of
other data points, which can help to provide investors with insight
relating to the current health and outlook for the company. This
information can be found on sec.gov, various financial publications, and
individual companies' websites.
Earnings season is important because it helps market participants
glean information from the companies that they are monitoring along with
the broader index. For example, a strong Apple (AAPL) earnings report
may see investors bullish on Nasdaq 100 futures, a concept discussed
further below when looking at bellwether stocks.
Something else that can accompany an earnings release is an
earnings call. This is a conference between the company and analysts,
press and investors which discusses the outcome of an earnings report
and, in many cases, opens the floor for questions to company management.
Such scrutiny of the reports can enable traders to access more
information to further inform their decisions, although not all
companies hold earnings calls.
WHEN IS EARNINGS SEASON & WHEN DO REPORTS COME OUT？
Earnings season takes place typically a few weeks after each quarter
ends (December, March, June, September). In other words, earnings
seasons begins around January-February (Q4 results), April-May (Q1
results), July-August (Q2 results) and October-November (Q3 results),
with the unofficial start of earnings season usually marked by when the
major US banks report results.
This typically coincides with an increase in the number of earnings
being released, while the unofficial end of earnings season is usually
around the time that Walmart (WMT) announces its earnings report.
3 THINGS TO LOOK FOR IN COMPANY EARNINGS REPORTS
There are a number of factors to look for in company earnings reports.
Traders should be most mindful of the performance of the largest
‘bellwether’ stocks, understand the significance of an earnings
recession in a given stock, and grasp how a stocks earnings announcement
might impact a relevant index, depending on the weighting of the given
security.
1) Performance of bellwether stocks
When analyzing company earnings, it is important to look out for
‘bellwether’ stocks which can be seen as a gauge for the performance of
the macro-economy. While the status of a bellwether stock can change
over time, the largest and most-established companies are typically
considered a bellwether stock.
An earnings recession is characterized as two consecutive quarters of
year-on-year declines in company profits. However, while earnings are an
important factor in stock market returns over the long term, an
earnings recession does not necessarily coincide with an economic
recession.
The chart below shows that in the past six earnings recessions
witnessed in the US, only two had coincided with an economic recession.
The blue circles show where there was an earnings recession without an
economic recession, while the red circles represent where both an
earnings and economic recession occurred.
Traders should understand that when trading earnings, certain stocks
will have a greater impact on the wider index according to their index
weighting. For example, when trading the Dow Jones, Boeing releasing its
earnings will be highly influential on the index, while Visa likely
won‘t be as influential, due to the former’s 9.49% weighting compared to
the latters 4.41%, as shown in the table below. This highlights the
importance of paying close attention to bellwether stocks and how they
may impact a broader equity index.
Earnings season provides a great opportunity for equity traders to
gain insight on stocks they have invested in, while also offering
context to potential share price moves. Read on for more on what
earnings season is, earning announcement dates to know, and what to look
for in an earnings report.To get more news about [url=https://www.wikifx.com/za_en/]WikiFX[/url], you can visit wikifx.com official website.
WHAT IS EARNINGS SEASON & WHY IS IT IMPORTANT？
Earnings season is a period each fiscal quarter, usually lasting
several weeks, where many of the largest listed companies announce their
latest financial accounts. An earnings report consists of revenue, net
income, earnings per share (EPS) and forward outlook, amongst a bevy of
other data points, which can help to provide investors with insight
relating to the current health and outlook for the company. This
information can be found on sec.gov, various financial publications, and
individual companies' websites.
Earnings season is important because it helps market participants
glean information from the companies that they are monitoring along with
the broader index. For example, a strong Apple (AAPL) earnings report
may see investors bullish on Nasdaq 100 futures, a concept discussed
further below when looking at bellwether stocks.
Something else that can accompany an earnings release is an
earnings call. This is a conference between the company and analysts,
press and investors which discusses the outcome of an earnings report
and, in many cases, opens the floor for questions to company management.
Such scrutiny of the reports can enable traders to access more
information to further inform their decisions, although not all
companies hold earnings calls.
WHEN IS EARNINGS SEASON & WHEN DO REPORTS COME OUT？
Earnings season takes place typically a few weeks after each quarter
ends (December, March, June, September). In other words, earnings
seasons begins around January-February (Q4 results), April-May (Q1
results), July-August (Q2 results) and October-November (Q3 results),
with the unofficial start of earnings season usually marked by when the
major US banks report results.
This typically coincides with an increase in the number of earnings
being released, while the unofficial end of earnings season is usually
around the time that Walmart (WMT) announces its earnings report.
3 THINGS TO LOOK FOR IN COMPANY EARNINGS REPORTS
There are a number of factors to look for in company earnings reports.
Traders should be most mindful of the performance of the largest
‘bellwether’ stocks, understand the significance of an earnings
recession in a given stock, and grasp how a stocks earnings announcement
might impact a relevant index, depending on the weighting of the given
security.
1) Performance of bellwether stocks
When analyzing company earnings, it is important to look out for
‘bellwether’ stocks which can be seen as a gauge for the performance of
the macro-economy. While the status of a bellwether stock can change
over time, the largest and most-established companies are typically
considered a bellwether stock.
An earnings recession is characterized as two consecutive quarters of
year-on-year declines in company profits. However, while earnings are an
important factor in stock market returns over the long term, an
earnings recession does not necessarily coincide with an economic
recession.
The chart below shows that in the past six earnings recessions
witnessed in the US, only two had coincided with an economic recession.
The blue circles show where there was an earnings recession without an
economic recession, while the red circles represent where both an
earnings and economic recession occurred.
Traders should understand that when trading earnings, certain stocks
will have a greater impact on the wider index according to their index
weighting. For example, when trading the Dow Jones, Boeing releasing its
earnings will be highly influential on the index, while Visa likely
won‘t be as influential, due to the former’s 9.49% weighting compared to
the latters 4.41%, as shown in the table below. This highlights the
importance of paying close attention to bellwether stocks and how they
may impact a broader equity index.