Edge-Forex Forex
Earnings Season

What is Earnings Season and What to Expect?

The earnings season offers wonderful opportunities for equities traders to learn more about the firms they have invested in and to put prospective share price movements into perspective. Continue reading to learn more about the earnings season, important dates for earnings announcements, and what to look for in an earnings report.


Every fiscal quarter, during the “earnings season,” many of the biggest publicly traded corporations release their most recent financial reports. This season typically lasts a few weeks. Revenue, net income, earnings per share (EPS), and forward forecast are just a few of the data items included in an earnings report that may assist investors gain understanding of the company’s present state and future prospects. You may get this information online at sec.gov, in a number of financial magazines, and on the websites of specific businesses.

The earnings season is crucial because it enables market players to get data from the firms they are watching as well as the larger index. When considering bellwether stocks, for instance, a positive Apple (AAPL) earnings report may cause investors to be optimistic on Nasdaq 100 futures.

An earnings call is another event that could go along with an earnings announcement. This is a conference that the firm has with analysts, the press, and investors to discuss the results of an earnings report and, in many instances, to allow audience members to ask management questions. Even while not all firms host earnings calls, traders may get additional information by carefully examining the reports to help them make judgments.


Typically, earnings season begins a few weeks following the conclusion of each quarter (December, March, June, September). In other words, the start of the earnings season coincides with the release of the major US banks’ quarterly results, which typically occurs in January or February for Q4 results, April or May for Q1 results, July or August for Q2 findings, and October or November for Q3 results.

Earnings Season

When Walmart (WMT) issues its earnings report, the unofficial conclusion of earnings season normally coincides with an increase in the number of earnings reports being issued.


The earnings reports of companies should include a number of things. Traders should pay close attention to the performance of the biggest “bellwether” stocks, comprehend the importance of an earnings recession in a certain firm, and be aware of how, based on the weighting of the specific security, an earnings release may affect a relevant index.

1) The performance of bellwether stocks

When examining corporate results, it’s critical to keep an eye out for “bellwether” stocks, which serve as a barometer for the health of the whole economy. Even though a stock’s position as a bellwether might alter over time, the biggest and most well-known businesses are normally included in this category.

An example of a bellwether stock is:

FedEx (FDX): Delivers items to customers and companies worldwide.

Given its extensive exposure to the construction, industrial, and agricultural sectors, notably in China, Caterpillar (CAT), the biggest manufacturer of heavy-duty equipment in the world, has been seen as a bellwether.

Measure of the state of the manufacturing industry: 3M (MMM)

One of the biggest firms in the world is Apple (AAPL). Important, especially for chipmakers that are major suppliers.

2) Earnings recession

When firm profits decrease year over year for two consecutive quarters, it is considered to be an earnings recession. Although profits are a significant component in long-term stock market returns, an earnings recession does not always follow an economic slump.

Only two of the previous six US wage recessions—as seen in the table below—had an accompanying economic downturn. The red circles indicate areas where both an earnings and an economic recession occurred, whereas the blue circles indicate areas where there was just an earnings recession.

3) Earnings and the weighting of stock indexes

Investors should be aware that some companies will have a stronger influence on the overall index when results are traded due to their index weighting. For instance, when trading the Dow Jones, the announcement of Boeing’s earnings will have a significant impact on the index, whereas the announcement of Visa’s earnings is likely to have less of an impact given the former’s weighting of 9.49% compared to the latter’s 4.41%, as shown in the table below. This emphasizes how crucial it is to closely monitor bellwether companies and how they may affect a wider equities index.


Although we have a detailed tutorial on how to trade earnings season, the following points should be kept in mind:

1) Understand the ‘anticipated’ outcomes

Knowing what is “anticipated” in terms of revenue/sales and profits per share (EPS) statistics is crucial since a company’s share price response is often based on how much it exceeds or falls short of an aggregate of analysts’ expectations.

2) Pay attention to unexpected announcements

Any unexpected announcements that coincide with an earnings release may also have an effect on a company’s share price. These might include plans for repurchasing shares of stock as well as corporate direction.

3) Recognize the consequences of stock-to-stock spillovers.

If a shareholder owns shares of a chipmaker, such as Dialog Semiconductor, profits from Apple might have a significant influence on the stock. This is an example of a spillover effect. As a result, it is crucial to evaluate connected stocks since they may indicate a sector’s future and lead to a potential sector rotation.

4) Consider volatility in the context of a predicted shift.

Determining the “anticipated move” for a stock in response to the binary earnings event may be a difficult task. A perspective adopted instead with volatility in mind may better prepare investors for large fluctuation without placing them on the unfavorable side of the final result.