Our Blog

Earnings for All Seasons

Earnings season can move markets. What is it and why is it important?


Earnings for all seasons gretchen stangier certified financial planner portand oregon

While nature offers four seasons, Wall Street only one – four times a year. It’s called “earnings season” and it can move the markets. So what is earnings season and why is it important?

Earnings season is the month of the year that follows each calendar quarter-end month (January, April, July and October). It is the time during which many public companies release quarterly earnings reports. Some public companies report earnings at other times during the year, but many are on the calendar year that ends December 31.

Reported Earnings

To understand the important of earnings, we need to remember that the value of a company can be tied to the amount of money it earns. Some companies don’t have earnings, and they are valued based on their potential, not current, earnings.¹

Wall Street analysts maintain a close pulse on a company’s quarterly report to help estimate future earnings. For example, these estimates may guide investors in determining an appropriate price for a company’s stock.² Remember, a company is not permitted to discuss interim earnings with select individuals; earnings reports must be disseminated publicly to level the playing field for all investors.

An Inside Look

When earnings reports are released, it tells the market two things.

First, it offers an insight into how the company is performing, and what its prospects may look like over the near term.²

And second, reports can serve as a bellwether for companies that still have not reported. For instance, if the earnings of a leading retailer are strong, it may offer an insight into the earnings of other retailers, as well as other companies that similarly benefit from higher consumer spending.

What Time?

Earnings reports are generally released when the market is closed in order to provide market participants adequate time to digest the results. Earnings reports may more markets. If earnings diverge from the expectations of professional investors and traders, then price swings – up or down – may be significant. Such divergences are referred to as an “earnings surprise.”

If you are a “buy-and-hold” investor and feel confident in a company’s long-term prospects, earnings season may mean little to you, since short-term results may not impact you long-term outlook. However, earnings reports can be meaningful if an earnings shortfall reflects a structural problem with a business or represents the continuation a downward trend in earnings.

¹ Past performance does not guarantee future results. Keep in mind that they return and principal value of stock prices will fluctuate as market conditions change. And shares, when sold, may be worth more or less that their original cost.

² This is a hypothetical example used for illustrative purpose only. It is not representative of any specific investment or combination of investments.

The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG Suite is not affiliated with the named broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Copyright 2018 FMG Suite.

DISCLAIMER: This website is for informational purposes only and does not constitute a complete description of our investment advisory services or any past performance. This website is neither a solicitation nor an offer to sell securities or investment advisory services except where we are appropriately registered or exempt from such registration. Information throughout this site, whether stock quotes, charts, articles, or any other statement or statements regarding market or other financial information, is obtained from sources which we and our suppliers believe to be reliable.  However, we do not warrant or guarantee the timeliness or accuracy of this information. Nothing on this website should be interpreted to state or imply that past results are any indication of future performance. THERE ARE NO WARRANTIES, EXPRESSED OR IMPLIED, AS TO ACCURACY, COMPLETENESS, OR RESULTS OBTAINED FROM ANY INFORMATION POSTED ON THIS OR ANY ‘LINKED’ WEBSITE.

Back

DISCLOSURE: Investment advisory services are offered through Gretchen Stangier, Inc. DBA Stangier Wealth Management (“Stangier Wealth Management”), an investment advisor registered with the U.S. Securities and Exchange Commission. Stangier Wealth Management only offers investment advisory services where it is appropriately registered or exempt from registration and only after clients have entered into an investment advisory agreement confirming the terms of engagement and have been provided copies of the firm’s ADV Part 2A brochure and Part 3 documents.

DISCLAIMER: This website is for informational purposes only and does not constitute a complete description of our investment services or performance. This website is in no way a solicitation or offer to sell securities or investment advisory services except, where applicable, in states where we are registered or where an exemption or exclusion from such registration exists. Information throughout this site, whether stock quotes, charts, articles, or any other statement or statements regarding market or other financial information, is obtained from sources which we, and our suppliers believe reliable, but we do not warrant or guarantee the timeliness or accuracy of this information. Nothing on this website should be interpreted to state or imply that past results are an indication of future performance. THERE ARE NO WARRANTIES, EXPRESSED OR IMPLIED, AS TO ACCURACY, COMPLETENESS, OR RESULTS OBTAINED FROM ANY INFORMATION POSTED ON THIS OR ANY ‘LINKED’ WEBSITE.

You may also like

The Solar Cycle and Economic Cycles

According to NASA, the sun’s current cycle, known as Solar Cycle 24, is expected to reach its peak in early-…

Seven Questions to Ask Before Investing

We have all heard of the seven deadly sins, things that you should never do or you risk the harshest…

Market Timing: Risk vs. Reward

For first-time investors, putting money into the stock market may seem like an intimidating task. You may be asking yourself,…