The quarterly reports. Minimum trade maximum profits!

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In July, the start of the earnings season of American companies for the second quarter. Investors are hoping that the published data allow one to assess the degree of influence of the spread of the coronavirus in the profit of companies and generate a forecast for the remainder of 2020. It is expected that most companies will conclude the year with lower earnings. However, the possible amount of this reduction until it is impossible to calculate. Many large companies had previously announced the withdrawal of existing predictions on the results of its activities. However, they refused to provide an updated forecast because of the high level of uncertainty in pandemic coronavirus. American business loses revenue. Many companies suspend operations and send employees on leave. Some experts believe that the publication of quarterly reports will lead to the resumption of sales after a certain growth of the market in recent days. The Wall Street Journal writes that the forthcoming publication of corporate reports will be a test for the stock market.

 

The reporting season in the US - profitable trading period, which is awaited by traders all over the world. Financial statements and quarterly results of the largest corporations in America cause the greatest fluctuations in stock prices and limit market activity that creates maximum opportunities for earnings!

 

What is important reporting season, and what should investors focus?

 

Most companies from the S&P 500 index report based on the period coinciding with the calendar year. Accordingly, after the first decade of the month following the reporting quarter start of publication of financial results. The peak of earnings season is at the end of this month.

 

Year divided into four quarters, for example if we are talking about reporting for the second quarter, i.e. April-June, after July 10 will begin the publication of the results.

 

Higher volatility gives you the opportunity to earn and in the short term.

  1. If financial, or quarterly, or annual report about increasing profits or production, it is positive interest from investors, which creates increased demand, and stocks start to rise in price.
  2. If the company claims a decrease in profit, revenue, increase in expenses, after such news, the stock will drop.

 

Often, companies whose securities are traded on U.S. exchanges, publish reports before opening of the trading session (usually listing with the NYSE) or after its closure (NASDAQ), so the opening bid on him with a large gap. That is, in the case of a correct forecast are important indicators of the financial result for the investor can be fantastic! However, even having missed a sharp movement, the investor may still have time to enter the market, evaluating more adequately fundamentali Corporation.

 

There are a number of key performance indicators, actively studied by investors after the publication of the statements and speeches of top management:

  1. eps earnings per share — in most cases the most important financial indicators of the company; in the case when a Corporation has undergone any unexpected expenses or has received a lump-sum income, is used adjusted earnings per share (from ordinary operations);
  2. revenue (sales) — revenues (sales);
  3. product sales by segment (e.g. iPhone, iPad etc. Apple);
  4. the company's forecast for the next quarter, year; sometimes there are more long-term forecasts, on the contrary, some corporations do not publish estimates of the future;
  5. margin — the indicator of efficiency is the ratio of income and revenue, there are different varieties of this indicator, depending on the type of income (gross, operating, etc.);
  6. strategic plans, including capital expenditures;
  7. the assessment of the economy and consumer demand;
  8. announced and actually implemented the buyback program.

 

While often important, is not absolute but relative evaluation. That is fundamentally not how rose or fell a certain rate, and how it compares with expectations.

 

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22 June, 2020
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