• All
  • Search
  • Trading Accounts
  • TradingView
  • Trading Fees
  • facebook
  • instagram
  • twitter
  • linkedin
  • youtube
  • telegram
Trading Earnings: What You Need To Know About Earnings Season


Trading Earnings: What You Need To Know About Earnings Season

Trading Earnings: What You Need To Know About Earnings Season

Vantage Updated Updated Wed, June 14 01:36

For investors in the world’s largest stock market, the earnings season is one of the most closely-watched events when listed companies report their quarterly results.

Officially called a Form 10-Q, public companies are required by the market regulator–the Securities and Exchange Commission (SEC)– to release their earnings report to shareholders and the public every three months.

During the US earnings season, companies will divulge key information that give investors more clarity on the state of the business over the reported period.

This includes key metrics such as revenue growth, gross margins, operating margins, and guidance on future growth.

Start Trading Stocks with $0 Commissions

Why spend on trading fees, when you can trade US stocks at $0 commission? Go long, or short, on popular US shares online such as Tesla (TSLA), Microsoft (MSFT), Netflix (NFLX) and Apple (AAPL). All Vantage clients enjoy $0 commissions when trading US stocks, so start trading away with a Live Account today!

When Is Earnings Season?

For a large number of public companies in the US, the quarterly earnings reporting periods tend to follow the calendar year.

So, the release of results usually falls within the two months after the end of each calendar quarter.

For example, for a company that follows a traditional January to end of March quarter, it will usually release its earnings numbers anywhere from late April to the end of May.

However, some companies differ in that they have earnings periods that don’t adhere to a traditional calendar quarter. These companies will have “fiscal quarters” and “fiscal years” specific to that firm.

Take Zoom Video Communications for example. The video-conferencing company has a first quarter fiscal year 2023 (Q1 FY2023) earnings period that covers the three months ending 30 April 2022.

Hence, the company reported earnings for that period in late May this year.

Why Do Earnings Matter?

Earnings season is important for a number of reasons. Primarily, it provides investors (and analysts that cover the stocks) an opportunity to analyse and reassess the prospects of businesses reporting.

As mentioned earlier, this is based on the latest numbers, such as their net income but also–more importantly–forward guidance that is provided by management.

This relates to what management says it expects to see on a variety of business metrics.

Ranging from revenue growth to operating margin, these numbers are guided for the upcoming quarter as well as the full fiscal year.

In reaction to these earnings numbers and management guidance, share prices could move dramatically.

Why It Can Affect Your Trading Strategy?

Earnings season is a period when there tends to be implied volatility in the stock market.

The release of company earnings also takes place outside of market-trading hours.

As a result, a stock’s reaction (up or down) could be amplified based on the lower liquidity in the market during pre-market and post-market trading.

Companies To Watch During Earnings Season

Investors should be on the lookout for large-cap and highly liquid stocks when the US earnings season comes around.

That’s because the combination of higher liquidity and more coverage from analysts, mean that the broader market gravitates towards them.

Some examples of these types of stocks include all the mega-cap tech stocks, such as:

  • Microsoft
  • Apple
  • Meta Platforms
  • Alphabet
  • Amazon
  • Nvidia
  • Tesla

Other large-cap, blue-chip technology stocks (that are highly liquid) can also garner attention. These would include the likes of Salesforce.com, Adobe, and ServiceNow, among others.

In other sectors, large blue-chip companies like JPMorgan Chase, Johnson & Johnson, Starbucks, and Home Depot are also some of the stocks investors can keep an eye on.

Is Earnings Season A Good Time To Trade?

The US earnings season comes with opportunities to trade given the typical prevailing market conditions.

That’s mainly down to the event-driven trading sentiments derived from earnings releases.

Given management guidance and the broader macroeconomic conditions, how a stock price moves can create a lot of volatility for the broader market as well.

On the whole, volatility in the market is a positive factor for investors who have a short-term, trading-oriented focus.

Earnings results from one company can also impact the share price of peers that operate in the same sector. Therefore, it’s important to be aware of what events are driving share price movements.

How To Trade During Earnings Season Using CFDs?

A Contract for Difference (CFD) can be used by traders during the earnings season to take advantage of opportunities that the market presents. It allows traders to speculate on the price movements of the stocks without actually owning them. This is due to the fact that investors can ‘go long’ or ‘go short’ on CFDs stocks.

Finally, it’s crucial that investors focus on having a suitable trading plan during the earnings season to properly manage the level of risk exposure.

Disclaimer: The material provided here has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Whilst it is not subject to any prohibition on dealing ahead of the dissemination of investment research we will not seek to take any advantage before providing it to our client. No representation or warranty is given as to the accuracy or completeness of this information and therefore it shouldn’t be relied upon as such. Any research provided does not have regard to specific financial situations, needs or investment objectives. Vantage accepts no responsibility for any use that may be made of these comments and for any consequences that result. Consequently, any person acting on it does so entirely at their own risk. We advise any readers of this material to seek professional advice where necessary. Without the approval of Vantage, reproduction or redistribution of this information isn’t permitted.

  • vantage academy open account

    Open Trading Account

    Discover the endless trading possibilities with our cutting-edge platform, designed to empower our traders. Practice trading the markets with a free demo account today.

  • vantage academy app

    Download Vantage App

    Trade on the go with the Vantage All-In-One Trading App, where smooth execution and market access come together in the palm of your hand.

  • vantage academy start trading

    Start Trading

    Are you an existing user? Login to your account to start trading 1,000+ CFD products including forex, indices, gold, shares and more.