What are the key points from earnings that move the price?

[kmiklas]

Hey All,

What are the key points and metrics from a quarterly earnings statement that cause a price reaction?

Where I stand now is that a reaction is based on two broad categories of data, metrics, and information: how the company performed relative to analyst expectations, and forward guidance. Did they miss, meet, or beat on GAAP/non-GAAP eps? How does the future look?

Am I missing anything critical? From here, I plan to dive into these metrics, and write up some case studies.

I'm trying to bridge the gap between Fundamental and Technical analysis; looking for fundamental metrics that have a technical effect, particularly following an earnings announcement. (Does that make sense?)

Thank you for your help, and tolerance of a rather n00bish question. Any resources to which you can point me would be helpful.

Sincerely,
Keith :^)

 

[TradeFinder.net]

Keith,

you are asking very good question btw.

IMO this will give you a bit more bullish momentum after earnings:

- EPS numbers actual or estimated.
- new 52 week high, or even all time high
- new recommendations from analysts (just quantity for a day for example)
- gap size + further price action.

- option volume before earnings date

+ there might be a correlation between current price action and past earnings results.

hope this will help

 

[Jones75]

how the company performed relative to analyst expectations, and forward guidance.

With the analyst expectations, that includes eps and revenue. One usually needs all three to see a major gyration.

 

[Tim Smith]

What are the key points and metrics from a quarterly earnings statement that cause a price reaction?

Do your own homework ?

Its not that difficult, the data's out there and you don't need a super-computer to calculate it.

Am I missing anything critical? From here, I plan to dive into these metrics, and write up some case studies.

Probably missing quite a lot. Why do you think the algo-funds expend so much time and effort on it ? You also need to put in more effort in researching the oddities of price movements in today's markets ...

If you're going to be "writing up" something, then you should really be doing your own homework.... you know, to give the audience the impression you actually know what you're talking about rather than copy/pasting off forums and Google ?

I'm trying to bridge the gap between Fundamental and Technical analysis; looking for fundamental metrics that have a technical effect, particularly following an earnings announcement. (Does that make sense?)

A lot of that sort of stuff has been done before. You might want to read up other papers on the matter so you don't end up re-inventing the wheel.

 

[victorycountry]

Do your own homework ?

Its not that difficult, the data's out there and you don't need a super-computer to calculate it.



Probably missing quite a lot. Why do you think the algo-funds expend so much time and effort on it ? You also need to put in more effort in researching the oddities of price movements in today's markets ...

If you're going to be "writing up" something, then you should really be doing your own homework.... you know, to give the audience the impression you actually know what you're talking about rather than copy/pasting off forums and Google ?




A lot of that sort of stuff has been done before. You might want to read up other papers on the matter so you don't end up re-inventing the wheel.

Hi Tim
Thanks for sharing your know-how. I enjoy reading your comments. You have good insight into the market. I think you are an active portfolio manager or having similar role in the industry.

 

[atrp2biz]

In theory, the value of a company is the present value of its cash flow through perpetuity. The quarter that is being reported represents only a tiny fraction of the valuation. Strong top and bottom line growth could signal strong cash flow growth going forward. However, management guidance will have the most significant impact to stock price reaction.

 

[killshottrader]

One thing to keep in mind is that for companies that issue forward guidance, it can and often does dominate the impact of the current quarter's EPS. For example you can find a company with an EPS "beat" on earnings that still gets crushed because guidance was softer than expected. This is particularly true for cyclical businesses. For example, STS "Beat" earnings on Oct 21st, but the stock was crushed due to poor guidance and expectations. A trader looking just at the quarter's EPS would miss this.

Also, keep in mind that with regards to market reaction EPS is not measured by an objective measure but vs. expectations set by analysts. The shadow world of earnings "beats" "revisions" and "misses" is how the analysts stay relevant and keep the institutional customers trading.

 

[Bekim]

Guidance, if it closes outside of the expected move

 

[kmiklas]

Do your own homework ? You also need to put in more effort... you should really be doing your own homework.... you know, to give the audience the impression you actually know what you're talking about rather than copy/pasting off forums and Google? You might want to read up other papers on the matter so you don't end up re-inventing the wheel.

Tim, please keep these "RTFB" answers to yourself. If you are unable or unwilling to answer the question, then move to the next thread. A big swingin D' like you may have all the answers, but I do not. I am new to this business and looking for helpful guidance.

 

[newwurldmn]

Tim, please keep these "RTFB" answers to yourself. If you are unable or unwilling to answer the question, then move to the next thread. A big swingin D' like you may have all the answers, but I do not. I am new to this business and looking for helpful guidance.

So many good answers to your question and you focus on the snotty Brit who didn't spoon feed you anything.

That's the definition of a "taker"