Yahoo Finance Why earnings season could boost your investments
Learn how to leverage this important event on the investment calendar
What is earnings season?
Earnings season is when publicly listed companies release the recent quarter’s financial information – in other words, their earnings, or revenues. The details they share can give lots of insight into a company, as well as showing industry trends, and what is happening in terms of broader economic growth. These results are a legal requirement, and in the US companies must report earnings every quarter. Before earnings reports are released, analysts estimate what they think companies will have earned. Then, if they beat this estimate when the reports come out, it’s called an ‘earnings surprise.’ This often results in their stock price increasing. If a company doesn’t meet its estimate, its share price often falls.
When is earnings season?
Earnings season starts a couple of weeks after the last month of each quarter – so that’s the middle to end of January, April, July and October. Not all companies release their reports during this time frame, but you can expect to see them from the majority of publicly listed companies. eToro has an earnings report calendar so you can see when earnings reports are scheduled to be released by publicly listed companies.
Why earnings season is great for investors
Earnings season is usually a very active time in the market, as earnings drive stock prices. As an investor, it’s important to understand how the financial fortunes of a company fluctuate – and what this means for your investments. Earnings season can give you a good steer on whether a company is worth investing in, or if you should sell shares that you already own. In order to start planning your investment strategy for earnings seasons, it can be a good idea to keep track of analysts’ forecasts. On eToro you can go to any stock’s page and click the ‘Research’ tab, where you will find analysts’ consensus and ratings, including links to the latest analyses.
What should I do if I’m planning to invest during earnings season?
You can use the earnings season to expand your portfolio effectively. But before you invest, your own research is essential. Think about what you know about a company, its recent performance and the general market conditions. Then use the information in the reports to give you some more detail. Are they turning a profit? What do company executives expect to happen in the next few months? Do these expectations match your own or those of analysts? You also need to look at the information provided by analysts. These are really important as the predictions they give can influence share prices. If you’re after more information, eToro’s social news feed is a personalised feed that helps you follow financial instruments and investors you like, as well as interact with other eToro community members, so you’ve got all the information you need at hand.
What should I expect this earnings season?
Many investors are looking forward to strong earnings season results compared to last year when the world was at the height of the pandemic. It’s thought mass vaccine rollouts across the world will help many companies rally.
