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For stock investors, earnings season are some of the most highly anticipated time of the year. It’s when companies announce their quarterly earnings reports, giving investors a sense of how well the company has been performing and is expected to perform for the next quarter.
Due to the importance of such news events, media outlets and investment analysts will be covering the large public-listed stocks extensively. Stock brokerages, like Moomoo Singapore, also make it convenient for investors to keep tabs on the earnings-related news of their favourite companies.
The markets can turn more volatile during the earnings season. In the run-up to a company’s earnings report, stock prices can fluctuate based on investors’ expectations about how the company will fare compared to market forecasts.
After a company releases its earnings report, stocks can experience large swings in their share price. It is not unheard of for even big companies to see their share prices rise and fall by over 20% post-earnings.
Amid all this excitement (and noise), studying the fundamentals of a company can guide us toward making more prudent long-term investment decisions. Here are 4 things investors should note during the earnings season.
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#1 When Is The Earnings Season?
The earnings season represents the time when major companies release their earnings reports. This happens during four windows in a year – when companies report their quarterly financial results.
Publicly listed companies in the US have 40-45 days to release their earnings report for the first three fiscal quarters and 60-90 days for their full-year earnings report. While there’s no official start to the earnings season, it typically begins two weeks after the end of each quarter and lasts for about six weeks.
For example, for the first quarter of the year, between January and March, the earnings season will start two weeks later, i.e. mid-April, and end about six weeks later, i.e. end-May.
With so many companies reporting their earnings within the same timeframe and bearing in mind that they also have differing year-ends, it can be challenging to keep up with all the companies that we are interested in.
Thankfully, we can navigate the packed earnings season on our stock brokerage platform. On the moomoo trading platform, we have access to an Earnings Calendar, which tells us when all the companies are reporting their earnings.
Source: All screenshots from moomoo trading platform
We can also set notifications for an upcoming earnings report we are looking out for. This way, we won’t have to miss an earnings report for a company we are invested in or looking to invest in.
#2 Understanding The Different Types Of Investor Materials Released During The Earnings Season
For those who have invested in US companies, we may have come across various terms such as 10Q, 10K and even 8K. These are forms that must be filed with the Securities Exchange Commission (SEC).
They are meant to provide timely financial information to shareholders, stakeholders and the public.
The Form 10-Q, or 10Q in short, is filed for the first three quarters of a company’s fiscal year. It contains unaudited financial statements and information about the company’s operations in the previous three months. As mentioned, listed companies have 40-45 days from the end of their fiscal quarter to file their 10Q.
The Form 10-K, or 10K in short, must be submitted for the final fiscal quarter. It contains the company’s audited financial statement and a comprehensive overview of details about the company’s operations during the year. Listed companies have 60 to 90 days from the end of the fiscal year to file their 10K.
Along with the 10Q and 10K reports, certain companies may also release their press release, shareholder deck, and webcast. These are not required by the SEC, but they help to give more colour and/or zoom into specific information.
Outside of the earnings season, companies are also expected to file the Form 8K to announce major company events that shareholders should know about.
Within the moomoo trading platform, we can directly access the various 10Q, 10K and other announcements that each company makes. As shown in the screengrabs above, using Microsoft’s latest 10Q filing on 26 April 2023 as an example, we can simply click on the “News > Announcement” tab, and view its earnings report on the app.
If we click on the “News” tab, we can also read news articles from various media platforms in reaction to Microsoft’s 10Q report, which saw the company’s share price soaring 7.2% post-earnings, adding nearly US$150 billion to its market capitalisation.
#3 Look At The Key Financial Indicators
Though accessing the earnings report is useful, we also need to understand what it is telling us.
Again, we can rely on our stock brokerage platform to interpret the financial information for us. For example, instead of reading the 34-page Tesla 10Q report, we can instead view the financial information in graphics on the moomoo trading platform.
One of the headline figures we typically want to see is a company’s revenue. In the example below, the first thing we can see in Tesla’s “Financials” tab (on the left) is that the company reported close to a 25% jump in its latest Q12023 revenue. However, its net income dropped by about 23% (on the right).
Scrolling down, we can see a quarterly breakdown of its revenue – which contains even more information than a single 10Q report would have. In essence, moomoo also helps to aggregate information over past 10Q and 10K reports, saving us time and effort from looking at these reports.
We can also see that there are options for a similar quarterly breakdown on the figures for “Operating Profit” and “Net Income”.
If we prefer, we can also look into Tesla’s numbers more extensively. For example, we can see that the bulk of Tesla’s sales come from its cars (or the Automotive segment). Within the chart (on the left), we can also see its revenue breakdown from its various regions.
The chart on the right further details Tesla’s deliveries. We can see that while vehicle deliveries continued to grow in Q1 2023, it was at a slower pace.
The moomoo trading platform also depicts other financial indicators such as Earnings Per Share (EPS), Free Cash Flow, Current Ratio, Gross Margin and more. If we are unsure of any terms, we can always look up the simple explanation of the terms on the moomoo app, which is just one click away (in the smaller red circle).
We can also study the balance sheet performance to understand the company’s cash flow position. Otherwise, we can also click on the “Details” tab in each chart to look at more details that were presented in its 10Q report.
#4 Benchmark The Company’s Financial Results Against Estimates
Within the moomoo trading platform, we can also see analyst estimates for the stock’s EPS, revenue and EBIT (earnings before interest and tax). For example, we can also see the number of analysts estimates that moomoo used to derive the figures below.
As we can see in the chart above, Tesla’s latest 1Q 2023 EPS and revenue were not far off from the estimates. However, its EBIT was lower than the estimate. This resulted in its share price tanking 8% immediately post-earnings.
Analysts expect revenue to continue growing strongly in the coming quarters. The expectation now is for EPS and EBIT to taper off slightly in the coming quarter before pushing on to a higher level again.
If, in the next quarter’s earnings report, Tesla reports poorer-than-expected figures, we can expect its shares to be impacted. If it reports better-than-expected results, then Tesla shares should perform better as well.
Take Your Time Analysing The Stock
The last thing we want is to be influenced into panicked decisions in the lead-up to or post-earnings report. This is why it pays to DYODD – a popular acronym telling investors to Do Your Own Due Diligence.
Moomoo gives us the convenience of shortlisting companies that we wish to pay attention to – so that we never have to miss an earnings report that matters to us.
On the moomoo trading platform, we not only get direct access to the earnings reports of listed companies on a single brokerage platform, but, we can also review the information in graphic form. This makes it much easier to understand than simply reading text. Furthermore, we can also access analyst estimates that help us make sense of where the market believes the company is headed.
This can help us stay on top of the fundamental analysis of a company that we are invested in or may be looking for opportunities to get invested in. Besides this, Moomoo also helps us become more informed investors by providing other types of fundamental (and even technical) analysis of a company.
For example, in the screengrab (left) below, we can see that Tesla has a PE ratio of 45.35 compared to the industry average of 13.80. This tells us that Tesla’s valuation is certainly much higher than industry norms – and we need to understand the reasons why we want to invest in the company.
In the diagram on the right, we can also see that Tesla has strong institutional buy-in. Over 43% of its stocks are owned by institutional investors. The biggest being the Vanguard Group, BlackRock, State Street Global Advisors, and Capital Research, among others.
Don’t Wait Till The US Market Opens To Start Investing
As some investors will know, companies tend to release their earnings reports either before the market opens or after the market closes. Armed with information from the earnings reports, we may prefer to invest in stocks before the US market hours officially begin at 9.30am to 4pm Eastern Time (ET) (or 9.30-10.30pm to 4am-5am in Singapore).
On the moomoo trading platform, we can invest outside of the traditional US market hours – in pre-market hours and after-hours trading. What used to be reserved for high net-worth investors can now be readily accessed by retail investors like us.
| Pre-Market | Market Hours | After-Hours | |
| Eastern Time (ET) | 4am to 9.30am | 9.30am to 4pm | 4pm to 8pm |
| Singapore Time (SGT) | 4-5pm to 9.30-10.30pm | 9.30-10.30pm to 4-5am | 4-5am to 8-9am |
* Range in SGT is due to daylight savings
When investing outside of normal US trading hours, we should also note that liquidity may be lower, and thus we will need to make more informed decisions. With Level 2 market data, Moomoo gives us the depth of all orders submitted to the exchange.
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All views expressed in the article are the independent opinions of DollarsAndSense. Neither Moomoo Singapore or its affiliates shall be liable for the content of the information provided. This advertisement has not been reviewed by the Monetary Authority of Singapore.
*T&Cs apply
^Platform & other fees apply
#Value may fluctuate according to market volatility
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