Earnings season happens four times a year, and it's the most volatile period for stocks. In just a few weeks, companies report their results and the market reprices everything. Here's how to navigate it.
The Earnings Calendar
| Quarter | Reporting Period | Season Starts |
|---|---|---|
| Q1 | Jan – Mar | Mid-April |
| Q2 | Apr – Jun | Mid-July |
| Q3 | Jul – Sep | Mid-October |
| Q4 | Oct – Dec | Mid-January |
The Three Things That Matter
1. EPS (Earnings Per Share)
Did the company beat or miss analyst expectations?
- Beat by >5% → Usually bullish
- Miss by >5% → Usually bearish
- In-line → Reaction depends on guidance
2. Revenue
Revenue is harder to manipulate than earnings. A company that beats on EPS but misses on revenue may have cut costs rather than grown — a temporary fix.
3. Forward Guidance
This is the most important part. A company can beat on everything but crash if it lowers guidance for next quarter. Conversely, a miss with strong guidance can cause a stock to rally.
Post-Earnings Drift
Research shows that stocks tend to drift in the direction of the earnings surprise for 60-90 days after reporting:
| Surprise Type | Average 60-Day Drift |
|---|---|
| Big beat (>10%) | +4.3% |
| Moderate beat (5-10%) | +2.1% |
| In-line | +0.2% |
| Moderate miss (-5-10%) | -3.8% |
| Big miss (>-10%) | -6.5% |
Earnings Season Checklist
- Check the earnings calendar for your holdings' reporting dates
- Review analyst estimates (EPS and revenue expectations)
- Listen to (or read transcripts of) the earnings call for forward guidance
- Don't panic-sell on a miss — wait for the full picture
- Consider adding to positions that beat expectations and raise guidance
How Aristockrat Handles Earnings
Our AI automatically updates scores within 24 hours of an earnings report. We factor in the magnitude of the beat/miss, the quality of guidance, and any balance sheet changes. You'll see score adjustments in real-time.