Trading Earnings Reports

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A lot of traders use earnings as a catalyst to make short-term day or swing trades. They’ll do so using the headline numbers (earnings per share and revenue), and whether they exceed or miss consensus estimates.

Earnings Season

An earnings season is a period during which most public companies release their earnings reports, which detail items such as net income, earnings per share (EPS) and net sales. The reports give market participants an insight into the outlook of a company, and can help them to determine whether they should take a position on the price of the stock.

Companies release quarterly reports during periods known as earnings seasons. These reports can cause a significant amount of market volatility.

I trade on PSE and I heard a lot about TRADING THE EARNINGS REPORT so I made a little analysis and statistics to see if there is a relationship between good earnings report and bad earnings report.

They often say that when a company releases good earnings report ay aakyat ang stock price at babagsak naman kapag bad or negative ang earnings report.

I tried gathering data of 2019 quarterly earning reports including annual report of 2018 and tried comparing it with the price change of a specific stock on the date of the release. What you can see below is the historical data of earning percentages (Q1 to 4 2019 and Annual report of 2018), date kung kailan na release ang report and % change ng price on that day, whether + or negative ba, naka indicate sa excel table.

My objective in doing this is to test whether may relationship ba between earnings either + or – sa price change ng isang stock on the day na na release ang report. Is it valid to say na bibilhin ko stock na to kase positive earnings neto or ilang folds increase to by this quarter or by this year?

I have 71 data sets as of earnings vs. price change. Using SPSS (software for analyzing data and running statistical tests). I used Pearson Correlation to test whether may relationship nga ba yung dalawa (earnings either + and price change). Explain ko lang konti, Correlation coefficients are used to measure the strength of the relationship between two variables.

I standardized my data since medyo extremes values niya, me 6000% me 10%, kaya me nakikita kayo Zearnings and Zprice.

Sa result eto una mo titingnan, yung Sig Value. Ang sig value niya ay .295. Ano ba ang sig value, ito yung nagsasabi kung may signifcant relationship ba ang dalawang variables natin which is price and earnings report. Ang basic rule neto is kapag ang value ng sig = 0.05 or less than that, significant siya. Anything above that value tells us na HINDI SIGNIFICANT ang RELATIONSHIP nila. Which is in this case, obviously walang relationship or not significant siya.

Disclaimer: Pwede kayo mag add ng data ng past five years or pwede niyo lahatin yung 2019 stocks. Run the same statistics and show us the result. If it will vary then you can dispute this claim. In this case, we have drawn implications from the result itself.

Sa ibang markets baka applicable ang pag trade ng earnings report. Sa PSE hindi ayun sa na gather ko na data.

Note If ganun lang ka simple na bibili ka lang kapag nagrelease ng good earnings report ang isang stock I’m sure marami na billionaire retail traders sa Pinas.

Stay tuned kasi I’m planning to do a lot of statistics/analysis/research sa iba’t ibang topics at bagay surrounding stock market particularly sa PSE.

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