From Our Founder: Earnings Season

I've found that earnings season is one of the least understood areas of finance... unless you happen to work in the investment analysis business. Most people haven't been acquainted with the importance of the quarterly earnings seasons nor their impact on stock market performance. Thus, I'd like to take a few moments to discuss this interesting topic.

U.S. companies with publicly-traded stock report revenue, earnings (or losses) and a range of other financial figures for each fiscal quarter. Thus, there are four earnings seasons each year, and each season typically begins 2–3 weeks after the end of a calendar quarter (though a few firms report earnings off-sequence). An earnings season will last around a month, but most of the activity occurs during the two middle weeks of the season. A public conference call by each firm's management team typically accompanies an earnings report. Equity analysts use these conference calls to ask questions... and attempt to earn some notoriety. I always say that you'll hear the smartest and the stupidest questions on these calls! (My favorite dumb inquiry: "How do I model your [insert financial metric here]?")
 

Wall Street analysts must pause summer vacations in the Hamptons for 2Q (second quarter) earnings season

By the time you read this newsletter, most of our earnings analyses will have been published. That also means the stock market will have had time to re-price shares based on earnings. Every season brings volatility to the market, and a stock portfolio's annual returns are heavily impacted by quarterly reports. That's why you should care about earnings announcements! It's also why we comb through all of the earnings information released by companies we follow. We condense details from a 25–40 page SEC document, a slideshow presentation and a conference call into an actionable analysis of the company's results before presenting our own forecast. Click here to see an example of a Forward View earnings analysis from the first quarter of 2015.

I hope you have enjoyed this article and have a better understanding of earnings seasons. They're busy periods for me, but earnings seasons also separate the good analysts from the chaff. Forward View will always be focused on timely and useful earnings report research products because we're centered on client success 24/7.

Nathan Yates

Forward View Consulting, 288 Crack Rock Road, Clintwood, VA 24228, USA

Nathan Yates has been fascinated by technology and finance since he was young. He was the kid devouring the business section of the newspaper (remember those?) while others read everything else. Nathan believes that the American economy is built from the bottom-up, meaning that small businesses and local nonprofits are the foundation of our nation's success. These organizations are the lifeblood of towns and cities across the U.S. Unfortunately, most consulting firms overlook companies or organizations that don't have eight-figure budgets. Nathan thought Forward View Consulting should be different. And we are. As Lead Consultant, Nathan works with each client to deliver only the best financial and/or website development services. Nathan's years of web design experience and his business degrees ensure that professional expertise is brought to each project. Our network of contacts can offer additional specialized guidance if needed. Before creating Forward View Consulting, Nathan worked for an independent equity research firm as a Research Associate covering the industrial and energy sectors. This work involved preparing quarterly 15-40 page reports on multi-billion dollar corporations along with timely analysis of M&A activity and industry-wide news. He also managed research distribution and the company's online presence. Nathan also spent a summer serving as a local financial adviser's Research Intern. Nathan earned a Bachelor's degree in Economics and Finance from Southern New Hampshire University, graduating summa cum laude. He then earned a Master's degree in Finance from Southern New Hampshire University, where he was named the Outstanding Student in his particular concentration. Now, Nathan is an adjunct professor teaching economics and finance for his alma mater. In his spare time, Nathan enjoys fishing, reading, time with family and serving as a volunteer webmaster for the Clintwood United Methodist Church.