Importance Of Earnings Season

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On the heels of earnings season, companies are about to report their earnings for the latest quarter. Earnings seasons is commonly associated with the months immediately following the end of each quarter. This occurs 4 times a year and typically every publicly traded company will report their earnings estimates from the previous quarter. The results reported during earning seasons dictate how high or low a company 's revenue and earning per share have performed. Paying attention to earning and earning season can be very useful to investors because growing and consistent earnings are arguably the most important drive of the stock market. Not only does earnings season reflect the state of the stock market but it can also demonstrate how the …show more content…
Earnings surprises occur when a company reports earnings significantly better or worse than a company expects. This can cause drastic swings in share prices in either direction. When there is a large amount of “beats”, it is a generally a positive signal to investors of a bullish movements. On the other hand, when companies fail to meet expectations, share prices tend to decline and lead investors to refrain from the equities market. If there enough negative surprises, stock buying can falter throughout the overall market.

Often times however, the state of the stock market is dictated by a handful of very large market cap stocks. A bellwether stock by definition is a company stock that is used to gauge the performance of the whole economy. In the past, General Motors and IBM were viewed as bellwether stocks, and now Wal-Mart and Alcoa are held in the same regard. Quite simply, when these stocks are performing well, then investors can be optimistic of the state of the stock market and overall economy. However, when these stocks fail to meet expectations, it may point to trouble for the stock market and
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The outlook of many large companies in varying industries provide insight on where the U.S. and global economy might be heading. When retail banks report earnings, this can reflect the demand for loans in the U.S. and globally. LIkewise retailers play a large role in how consumerism is performing. When large retailers like Wal-Mart and Target beat expectations, it reflects an improving consumer spending sentiment. Currently, consumerism has been strong in the United States, however manufacturing has been quite soft. Industrial facing businesses have performed poorly as exhibited by worse than expected organic growth of a number the industry’s

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