TD Ameritrade offers a full menu of tools, previews, and third-party analysis around earnings season. Here’s how you can find and make best use of them.
TD Ameritrade offers a full menu of third-party earnings analysis and coverage
Read The Ticker Tape and watch the TD Ameritrade Network for insight
Earnings season is right around the corner, and even seasoned investors can find it challenging to keep up with the steady flow of corporate news during those frantic weeks of high-volume company reports every quarter.
Luckily, TD Ameritrade offers a full menu of tools that can help you stay on top of the news and maybe not feel like your head is spinning. Here’s where you can find third-party information you might need both before and after companies start their quarterly reporting barrage.
Ahead of time, consider checking The Ticker Tape for our sector outlooks, which run before major earnings reports from certain industries including Financials, Technology, Consumer Discretionary, and others. These outlooks offer insight into the trends analysts are looking at as the major companies in each sector get ready to report.
Once earnings start in earnest, The Ticker Tape publishes regular earnings previews for some of the most actively traded companies, as well as timely information on some of the key results in the daily Market Update that runs each weekday morning.
Also, consider watching the TD Ameritrade Network*, where you can tune in for a full trading day’s worth of programming each trading day beginning at 8 a.m. ET/7 a.m. CT. During earnings season, you can get a full menu of pre- and post-earnings coverage, including company, sector, and market impact interpretations from knowledgeable third-party industry analysts and TD Ameritrade professionals.
Other earnings tools are available through TD Ameritrade online resources, including research on sectors and individual stocks as well as calendars.
Let’s take a quick look at what many veteran investors tend to watch during reporting season. We’ll also talk a bit about how option traders can use the TD Ameritrade platforms to help make decisions around earnings season.
It might be helpful to look at earnings reports as a “three-headed monster.” Staying on top of a company’s quarterly results means keeping an eye on earnings per share, revenue or sales, and forward guidance. If any one of those miss expectations, things might go south in a hurry. Often, it takes good tidings on all three for a stock to rise.
For instance, a company may have solid revenues and earnings per share (EPS), but if it gives unexpectedly negative guidance, the stock can go down. Stocks are forward-looking, so it’s often less about what companies have done in the past and more about what they might do in the future that influences their shares.
To get a sense of what analysts think a company might report before the actual earnings date, log in to tdameritade.com and select the Calendar tool. This is where you’ll find third-party analysts’ EPS consensus for the company’s next quarter.
The calendar gives you a day-by-day look at which companies are expected to report, along with third-party analysts’ consensus estimates and the estimate range for each company reporting that day (see figure 1). Consider checking the first column on the left, which tells you if the earnings date has been confirmed by the company in question. These dates can change as earnings season approaches.
Even if you stay on top of all this and a company’s earnings meet or exceed expectations, there’s still the conference call to consider. Companies usually provide conference call information on their investor relations sites. The calls typically take place right after the earnings release. If you’re trading the stock, try to listen to the call, or at least read a summary. Sometimes news announcements or comments by company leaders to analysts and investors listening in can have a quick impact on the stock price.
For instance, in its Q1 earnings call in April 2018, the chief financial officer of the company shown in figure 2 appeared to spook some Wall Street analysts by saying he believed that adjusted profit per share in that quarter would represent the “high water mark” for the year. Many analysts and investors read the remark as bearish, and the stock fell quickly.
For option traders, the other TD Ameritrade metric to consider getting familiar with around earnings time is the Market Maker Move (MMM), which you can find on the thinkorswim platform from TD Ameritrade. The MMM measures the one-day expected move in the underlying around an event. Keep in mind the MMM measures the magnitude—but not the directionof the expected move. Knowing the MMM a day or two before earnings can help you strategize on options trades around the event.
It can also give you a sense of where to place stops if you buy or sell the underlying stock. For instance, if the MMM forecasts a 4% move, you might consider placing a stop at a level 4% under the current price to help cut your potential losses if the stock moves lower (and you were expecting it to go higher). Remember, placing a stop loss order will not guarantee an execution at or near your activation price. Once activated, it competes with other incoming market orders. Also, with a stop limit order, you risk missing the market altogether. In a fast-moving market, it might be impossible to execute an order at the stop-limit price or better, so you might not have the protection you sought.
Earnings season is typically a time of increased volatility, which can mean additional risk and opportunity for traders and investors alike. Keeping up with the flow of earnings news and data can be a challenge. But knowing where to find (and knowing how to interpret) all that news and data can help you navigate the rough waters.
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Content intended for educational/informational purposes only. Not investment advice, or a recommendation of any security, strategy, or account type.
Be sure to understand all risks involved with each strategy, including commission costs, before attempting to place any trade. Clients must consider all relevant risk factors, including their own personal financial situations, before trading.
Probability analysis results from the Market Maker Move indicator are theoretical in nature, not guaranteed, and do not reflect any degree of certainty of an event occurring.
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