News

TabbForum: Extreme Ways -- Trends and Consequences in Preliminary Earnings Events

Fri February 15, 2019

Access article

Excerpt of article below

Preliminary earnings announcements serve as useful breadcrumbs ahead of official quarterly results disclosures. But relying upon traditional sell-side analysts to sift through this information can leave serious gaps.

Effective equities and options trading requires prudent timing, as well as correct condition identification, to make each trade successful. That couldn’t be truer than when watching listed companies’ preliminary earnings announcements and guidance. Preliminaries serve as useful breadcrumbs ahead of official quarterly results disclosures, signaling potential volatility. This cautions institutional investors to be on alert and in search of the preliminaries as they aim to properly line up trades to reflect the latest earnings adjustments and revisions.

Trends around earnings can help uncover potential consequences and indicate upcoming market movement. Trusting demonstrated patterns in announcements over time requires ongoing investigation; especially when regarding the substance of new information, as well as the manner of its disclosure and timing.

The state of preliminaries today

In addition to quarterly earnings announcements, many companies will issue a preliminary earnings announcement – typically via press release – to set expectations for the market, usually three to four weeks before the results are official. Relying upon traditional sell-side analysts to sift through this information might work at the top end. But this can leave serious gaps – especially segmenting down to mid-cap and small-cap equities – and it doesn’t provide a cache of data to track historically. Most investment operations and trading desks today require far more content and context.