Earnings Season: What You Need to Know for Chump Profit

If you want to take your trading skills to the next level, you need to embrace earnings season. The financial fortunes of a company can and will change over time. As an investor, you need to be aware of these fluctuations and, in turn, understand what they mean for your holdings.

On the 24th January, Microsoft will report its latest earnings results, revealing how the company performed over the last three months. The anticipation of these results presents an opportunity for traders to potentially profit or face consequences. At Chump Profit, we look at what economic commentators believe and leverage our own insight to analyse the economic conditions of the company and assess its performance.

In this form of trading, we have the flexibility to go long or short on the stock price and make money if our predictions are correct. To make an informed decision, we examine the latest estimates and choose the best opportunity to enter the market.

To successfully navigate earnings season, it's crucial to understand CFD trading. Trading relies on information and timing, and at Chump Profit, we provide regular updates and insights through our blogs and daily reports. By leveraging this information, you can gather most of the data needed to start trading. Additionally, we help you choose the best brokerage platforms to trade on.

Earnings season refers to the periods when publicly listed companies release their quarterly reports. However, blindly trading during this time is not advisable. You need to know how to trade earnings season effectively by answering two important questions: "When is earnings season?" and "What information should I be looking for?" This comprehensive guide aims to answer these questions and more.

Understanding Business Results and Their Significance

Before investing in a company, it's essential to assess its profitability. Quarterly earnings reports play a crucial role in evaluating a company's financial performance. If a company consistently generates profits every quarter, it is likely to be a solid investment. Conversely, if it consistently incurs losses, it may not be a favourable option.

Earnings reports are public documents that display a company's profit or loss. While the accounting process for major companies can be complex, when reading quarterly reports, the primary focus is on determining the company's overall profitability. By subtracting the costs from the revenue, the remaining amount indicates whether the company made a profit or a quarterly loss. This information helps investors decide whether to invest in the company's shares or sell their existing holdings.

Earnings reports also serve as legal requirements for public companies. In the United States, for example, the Securities and Exchange Commission (SEC) mandates companies to report earnings every quarter. Therefore, if you have invested in a US-listed company, you can expect four earnings seasons each year.

Understanding Quarterly Business Results

Earnings season does not follow the annual calendar but aligns with the economic calendar, resulting in individual reporting periods. In general, each earnings season starts approximately a week after the final month of the previous quarter. Based on the US economic calendar, quarters are defined as follows:

January, February, and March = Q1

April, May, and June = Q2

July, August, and September = Q3

October, November, and December = Q4

Consequently, US companies typically publish their earnings reports after the final month of each quarter. This means that earnings season takes place during the following months:

Early-to-mid January

Early-to-mid April

Early-to-mid July

Early-to-mid October

Earnings season in the US unofficially begins with Alcoa, an aluminium producer, releasing its financial report. Other companies subsequently follow suit. Since each company has its own accounting periods and terms, there are no set dates for earnings season. It concludes when all.