Four times a year, thousands of US public companies report their quarterly results within a few weeks of each other. This stretch, known as earnings season, is when the market gets its best look at how businesses are actually performing.
When earnings season happens
Most companies use calendar quarters ending in March, June, September, and December. Reporting typically begins a couple of weeks after the quarter ends, with large banks traditionally among the first to report, and peaks over the following three to four weeks. Companies with different fiscal years, such as some retailers and tech firms, report on their own schedules.
The filings
The earnings release (Form 8-K)
Most companies announce results in a press release, often before the market opens or after it closes, and furnish it to the SEC under Item 2.02 of Form 8-K. The release contains headline numbers, segment results, and often guidance.
Form 10-Q and Form 10-K
The detailed quarterly report, Form 10-Q, is due 40 days after quarter end for large accelerated and accelerated filers and 45 days for other companies. After the fourth quarter, companies file the annual report, Form 10-K, due 60 days after year end for large accelerated filers, 75 days for accelerated filers, and 90 days for others. These filings include full financial statements, notes, risk factors, and management’s discussion.
The conference call
Most larger companies hold a call with analysts soon after the release. Management discusses results, then takes questions. Tone, answers to tough questions, and comments on demand trends can move a stock as much as the numbers themselves. Regulation FD requires companies to share material information publicly rather than selectively, which is one reason these calls are open to anyone.
Expectations: the benchmark that matters
Stocks move on results relative to expectations. The usual benchmark is the consensus estimate, the average of analysts’ forecasts for revenue and earnings per share. Many companies routinely report results slightly above consensus, so a small “beat” is often treated as the minimum requirement. Investors also form informal “whisper numbers” that can be higher than the published consensus.
What to watch
- Revenue vs. estimates: harder to engineer than earnings.
- Margins: are costs rising faster than sales?
- Guidance: the company’s outlook for the next quarter or year, often the biggest driver of the stock’s reaction.
- Segment and key metrics: cloud growth, same-store sales, subscribers, or whatever matters most for that business. See how to read a Big Tech earnings report.
- Cash flow: a check on the quality of reported earnings.
Reading the season as a whole
Beyond individual companies, earnings season gives a picture of the entire market. Watch the share of companies beating estimates, the overall earnings growth rate, and how estimates for coming quarters are revised. Rising forward estimates support stock prices; falling ones are a warning. And remember that a strong report does not guarantee a rising stock; we explain why in why a stock can fall after beating earnings.
