Why did stock price go up when earnings report were down?

GaSouthernTrader · May 20, 2014

I am new to trading. When I heard on the news and read reports that Home Depot did not meet their earnings target I thought for sure their stock would fall in price, but instead they had a huge gain!

Can someone please explain why this happened?

Hiperfly · May 20, 2014

Same question here, and vice-versa

NoBias · May 21, 2014

GaSouthernTrader said:
I am new to trading. When I heard on the news and read reports that Home Depot did not meet their earnings target I thought for sure their stock would fall in price, but instead they had a huge gain!

Can someone please explain why this happened?

There are many factors to an earnings report besides just miss/meet/excede earnings target.

Typical reason is "Guidance"

I did not follow the earnings report, but it appears that they increased their forecast, which equates to positive guidance.

A company can often "miss" by a few cents, but have positive guidance and have a short term effect of price going up.

Often guidance > actual earnings [when earnings are close to anticipated]

caveat being, there is more in an earnings report besides the miss/meet/exceeded and guidance. Just an example.

GaSouthernTrader · May 21, 2014

Thank you for that explanation.

TrendPlayer · May 21, 2014

Conference Calls can also have an effect on the stock

Tsing Tao · May 21, 2014

Or it could just be a continuation of the Dash For Trash mindset.

murray t turtle · May 21, 2014

NoBias said:
There are many factors to an earnings report besides just miss/meet/excede earnings target.

Typical reason is "Guidance"

I did not follow the earnings report, but it appears that they increased their forecast, which equates to positive guidance.

A company can often "miss" by a few cents, but have positive guidance and have a short term effect of price going up.

Often guidance > actual earnings [when earnings are close to anticipated]

caveat being, there is more in an earnings report besides the miss/meet/exceeded and guidance. Just an example.

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Good points N bias;

Havent read thier fundamentals or looked @ long term chart;
but 2 good reasons why''some'' buyers rush in even if ''earnings negative'' or even guidance is negative .There is a bias in a bull market; its UP. Bear markets also have a bias =its DOWN/downtrend. I see HD is near thier 52 week HI, thats bullish ;;too bad the bull market is so OLD + extended, It may get older in election year.Adios amigos.

a] Its a a bull market you know[ SPY,DIA,QQQ.....] ;;a bull market tide lifts even sinking ships like Bank America, Citigroup; not a prediction.

z]Much of the money in market is long term, they buy anytime;
especially on dips. They would buy more even in a bear market, but many of thier clients redeem money so they HAVE to sell in a bear market,LOL

swingtrader123 · May 22, 2014

GaSouthernTrader said:
I am new to trading. When I heard on the news and read reports that Home Depot did not meet their earnings target I thought for sure their stock would fall in price, but instead they had a huge gain!

Can someone please explain why this happened?

Home Depot only when up approximately 2%, this statistically insufficient. It is like need to explain why you are 36 seconds late on a 30 minute commute. To be a successful trader, you need to learn to ignore market noise.