“What really drives stock price is when something is unanticipated,” said Erik Gordon, a professor at the Ross School of Business at the University of Michigan.
Earnings season is the time during which publicly-traded companies announce their financial results in the market. It occurs at the end of every quarter, i.e., four times in a year and generally starts one or two weeks after the end of each calendar quarter (that is, a couple weeks after March 31, June 30, September 30 and December 31) and lasts about six weeks. The unofficial “kick off” of earnings season happens when aluminum giant Alcoa Inc. reports its earnings.
Before earnings are released, Wall Street analysts come up with estimates as to how they expect a company to perform.
When a company does better than the consensus estimate — an estimate based on the combined estimates of all analysts covering a company — it is known as “beating” the estimate. That may cause a company’s stock to jump. If earnings are weaker than the consensus, or “miss estimates,” the stock may tumble. If the analysts were right in their estimates, a company will often be said to have “met estimates” or to be “in line” with estimates. But simply beating or missing estimates isn’t always what moves a company’s stock price. Sometimes a company may beat estimates, but provide a dour outlook for the coming quarter, leading the shares to drop. That’s why it’s important to look at an earnings release in its entirety or await the filing of a 10-Q or 10-K.
This is a quick and dirty script that grabs the expected companies that report tomorrow from Yahoo Finance and downloads the estimated eps & sales for each of those companies. In a later post I’ll be using these estimates to calculate eps & revenues surprises from 8-K filings.