Publicly-traded different companies announce their earnings on quarters ending June, September, December, and March. Generally, the announcement dates are scheduled sometimes between the first and third week of the immediate next month of the quarter in which the earnings fall. An earnings calendar organizes and displays these earnings announcement by date and name of the companies. The name of the companies that are going to announce their earnings on a particular date are arranged alphabetically indicating the time and manner of the announcement. This helps the investors to make their future plan.
What are Earnings?
Earnings refer to profit, more explicitly profit after tax, i.e. exactly net profit. Net profit is one of the most important components of the earnings announcement which plays the role of catalyst for the movement of the stock in the market. Earnings and earnings-related other financial parameters indicate whether or not a company will run successfully and profitably in the future. An earnings report is also the major key to unveil the performance of the companies that are traded in the stock market. As the shareholders invest their money in shares of the companies, the earnings report is treated as a public document and is necessary to file the quarterly report in SEC form 10-Q and an annual earnings report in SEC Form 10-K. These are regularity requirement of SEC (Securities and Exchange Commission). The earnings report comprising other parameters such as revenue, net income, Earnings Before Interest and Taxes (EBIT), earnings per share, cash flow also provide the insight of the company and role of the management for the future prospect of the company. All these literally affect the stock movement in the market. So, checking an earnings calendar helps you a lot.
The earnings announce as told earlier is usually made on a particular date during the earnings season. As the earnings announcement approaches the date in the calendar, most interestingly, speculations and hedging activities start acceleration. While following the calendar daily leading the earnings announcement, you will see that the number of options volume or future contracts volume will steadily increase. Interestingly open interest may increase or decrease depending on the availability of the counter-party and number of settlements to close the future contracts. In general, investors with different expectation trade more erratically under such a volatile situation. This situation also reflects different investor viewpoints. However, as a prudent investor, you should wisely follow the earnings calendar from a comparative perspective. This can be done compiling both announced and projected earnings in a comprehensive table and filter the stock and financial parameters based on dates. A clear picture of financial growth or de-growth will come which will help you to take the decision. As soon as the earnings are announced, the volatility in the market typically drops. Investors who want to earn before earnings announcement speculatively, however, should focus on the strategy in which they could be net sellers to capture the higher premiums.