Earnings Season



Earnings season is a term you’ll hear or read with some frequency during the year. The market always approaches the earnings season with caution because of the uncertainty and the market can’t stand uncertainty.

Companies that hit or, better yet, exceed their number may see their stock rise. The market may hammer companies that fail to meet their number.

Industry Leaders

For industry leaders, the numbers come out in the form of estimates ahead of the actual report. If an industry leader stumbles on their numbers, you might see the whole sector suffer.

The earnings season occurs when a large number of companies report their quarterly profits or losses to the public. Market analysts follow major companies and estimate what the earnings number, reported as earnings per share or EPS, will be.

Some of the analysts have financial relationships with the companies they follow. There have been charges that earnings estimates where manipulated in the company’s favor.

Many companies also provide “earnings guidance,” which is management’s estimate of what the company will do in the future. There are rules and regulations about what they can say, but plenty of wiggle room that some in the industry say is too much and boarders on manipulation.

***AA-  Alcoa  is the first major company of the Dow that kicks off every earning season.

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