FYI: Roughly 2,100 companies reported earnings during the unofficial Q1 2018 reporting period that ran from April 9th through May 18th. We track the one-day stock price performance of every company that reports earnings. This obviously helps us monitor individual stock performance, but it also gives us an idea of how investors are reacting to earnings results at the macro level. (In order to track performance, remember that for a stock that reports earnings in the morning before the open of trading, we use its price change on that trading day. For a stock that reports earnings after the close of trading, we use its price change on the next trading day.)
Below is a chart that shows the one-day price reaction (%) for every stock that reported earnings during the Q1 reporting period. We’ve separated the distribution by stocks that beat EPS estimates, missed EPS estimates, and reported inline EPS estimates. As shown, 67.9% of stocks beat EPS estimates, while 24.5% missed and 7.7% reported inline. The average stock that beat EPS estimates gained 1.78% on its earnings reaction day. The average stock that missed EPS estimates had a one-day drop of 2.75% in response, while the average inline report saw a one-day price drop of 0.73%.
While the average stock that beat EPS estimates gained 1.78% on its earnings reaction day, you can see in the chart that there were hundreds of stocks that beat but still fell in price. Similarly, while most stocks that missed EPS estimates fell on the news, there were plenty that gained as well.
Regards,
Ted
https://www.bespokepremium.com/think-big-blog/investors-liked-what-they-saw-during-earnings-season/
