Earnings season is the period of time during which a large number of publicly traded companies release their quarterly earning reports. In general, each earnings season begins one or two weeks after the last month of each quarter (December, March, June, and September).
Thus, look for the majority of public companies to release their earnings in early to mid-January, April, July, and October. It is important to note that not all companies report during earnings season because the exact date of an earnings release depends on when the given company's quarter ends. As such, it is not uncommon to find companies reporting earnings between earnings seasons.
Kicking Off the Season
The unofficial kickoff to earnings season is the release of earnings by Alcoa (AA), which is a major aluminum producer and Dow Jones Industrial Average component, as it is one of the first major companies to release earnings after the end of each quarter. It also coincides with an increasing number of earnings reports being released. There is no official end to the earnings season, but it is considered to be over when most major companies have released their quarterly earnings reports, which generally occurs about six weeks after the start of the season.
For example, for the fourth quarter, you will often see an increasing number of earnings reports released in the second week of January (Alcoa typically releases at the start of the second week). About six weeks later, or near the end of February, the number of earnings reports starts to decrease to pre-earnings season levels. There is also very little time between each earnings season. For example, the earnings season for the first quarter begins in early April, which is a little over a month after the end of the fourth quarter season.
What Earnings Season Means for Investors
This is a very active time in the market as participants (analysts, traders, and investors) review the earnings reports, which may affect their positions on or in a company. You can often see a lot of movement in the shares of companies releasing reports as the market reacts to the new data. It is not unheard of to see shares jump 20% or more or to see them fall by this same amount. It is also a highly active time for the financial news media, such as CNBC and The Wall Street Journal. There is extensive media coverage of the major earnings releases from a general recap of the earnings to report on whether the companies missed, met, or beat analyst expectations.
Some traders look forward to earnings season, as it can be a period where they can confirm the positions they places. Shorting a stock before earnings and watching the price drop can be beneficial, as the psychological drop will usually trigger a sell-off. Conversely, a ramping up in production or revenue could result in a swift upward trajectory or stock price. Other investors sit out the season entirely, as there are too many "human" factors at play.
FAQs
Since the majority of public companies use calendar quarters (the end of March, June, September and December), earnings season focuses on this schedule. It typically begins the first two weeks after the end of each quarter (namely early/mid-January, early/mid-April, early/mid-July and early/mid-October).
What is the earnings season in trading? ›
Earnings season is the period during which publicly traded companies release their financial results. It is marked by increased market volatility, with individual stock prices often fluctuating significantly in response to releases, especially for growing companies.
What time do earnings reports come out? ›
In general, each earnings season begins one or two weeks after the last month of each quarter (December, March, June, and September). Thus, look for the majority of public companies to release their earnings in early to mid-January, April, July, and October.
What is earnings season surprise? ›
1) Estimates vs. Expectations: The standard definition of an earnings surprise is when actual earnings comes in higher than earnings estimates. But those estimates are the “published” numbers from the brokerage analysts.
How to make money during earnings season? ›
With that said, if you are looking to open a position to trade an earnings announcement, one of the simplest way is by buying or shorting the stock. If you believe a company will post strong earnings and expect the stock to rise after the announcement, you could purchase the stock beforehand.
How long are earning calls? ›
How Long Do These Calls Last? A report shows that earnings calls typically last anywhere between 46 to 60 minutes long for 68% of the respondents, while 20% reported that calls last 30 to 45 minutes long.
When should I buy options for earnings? ›
The easiest way for option buyers to mitigate volatility going into a date certain event is to only trade events that occur during expiration week and simply buy front-month options the day before the known event date occurs.
Should I sell stock before earnings? ›
Option 2: Sell part of every growth stock you own before it reports earnings. Believe it or not, this is a decent halfway measure … if you're running a concentrated portfolio. For instance, if you have, say, 12% of your account in a stock that's about to report, maybe you trim that down to 6% or 8%.
Should I buy calls before or after earnings? ›
If you are considering a new options position in advance of an earnings announcement, the simplest way to trade it is by purchasing calls if you think the price is going to increase above the current price, or to purchase puts if you think the price is going to decrease below the current price.
What is the best day to report earnings? ›
Looking at S&P 500 companies' earnings between Q3 2022 and Q3 2023, we see that Thursday is the most popular day, and over 85% of firms opt to announce in the middle of the week (chart below). What is the aversion to Mondays and Fridays?
The most important parts of an earnings report are the income statement, balance sheet, cash flow statement, and statement of shareholder equity. The press release and presentation deck portions of an earnings report can hold marketing bias, so do your due diligence and read the numbers.
What is an earnings date in stocks? ›
An earnings announcement occurs on a specific date during earnings season and is preceded by earnings estimates issued by equity analysts. If a company has been profitable leading up to the announcement, its share price will usually increase up to and slightly after the information is released.
How long does the earnings season last? ›
Earnings season is a period when a substantial percentage of publicly traded companies release their quarterly results. It typically begins two weeks after the end of the quarter (in the middle of January, April, July, and October) and lasts approximately six weeks.
Why is earnings season important? ›
If the majority of companies, particularly the established market leaders, are growing their sales and earnings, traders tend to feel more confident about future market prospects. On the other side of the coin, when earnings are trending below expectations, it can be a warning sign of potential trouble ahead.
What is a good earnings surprise? ›
A good earnings surprise is a pattern in which a company circulates an earnings announcement. Then the market will interpret it as better than was expected. The above chart illustrates an example of a good earnings announcement event pattern.
What months are in each financial quarter? ›
The definition of quarter is a three-month period within a company's financial year. It's used for budgeting and reporting purposes. The four quarters are: January to March, April to June, July to September, and October to December.
What does earning period mean? ›
Earnings Period means the period from and including the Starting Date up to and including the Divestment Date. Sample 1. Earnings Period means the three-year fiscal period consisting of the fiscal year of grant and the two subsequent fiscal years.
What is the first day of the calendar year for earnings? ›
Individuals are subject to a calendar tax year beginning Jan. 1 and ending Dec. 31.
What is earnings season in equity research? ›
Earnings season is a period when a substantial percentage of publicly traded companies release their quarterly results. It typically begins two weeks after the end of the quarter (in the middle of January, April, July, and October) and lasts approximately six weeks.
