- Earnings season is when companies release their quarterly financial performance, affecting stock prices.
- About 20% of the largest US companies, like Tesla and Boeing, are set to report this week.
- Low earnings expectations mean companies that exceed them could see a significant stock price boost
It’s that time of the quarter again—earnings season! This is when publicly traded companies reveal their financial performance over the past few months. Think of it like report card time, but for companies. And just like in school, these results can either thrill investors or cause some nervousness.
So why does this matter so much? Let’s dive into what’s happening and what you need to know as an investor.
Key Takeaways: Why Earnings Matter Right Now
- What’s Earnings Season? It’s the period when companies release their quarterly financial results, showing how much money they made, what they spent, and their plans for the future. This information helps investors decide whether to keep, buy, or sell stocks.
- 20% of Big Players Set to Report: This week, around 20% of the largest US companies in the S&P 500 index, including well-known names like Tesla, Inc. (NASDAQ: TSLA), The Boeing Company (NYSE: BA), and United Parcel Service, Inc. (NYSE: UPS), are releasing their earnings reports. These updates are crucial because they set the tone for the entire market.
- Low Expectations Could Lead to Surprises: Analysts are expecting only a 3% increase in earnings per share (EPS), which is relatively modest. This means that if companies beat these low expectations, their stock prices could jump. However, missing these targets could result in sharp drops.
Key Risks: What Investors Should Watch For
While earnings season can bring excitement, it can also create volatility—or big price swings. If major companies fail to meet investor expectations, we could see sharp sell-offs. And even if the results are good, the market’s reaction isn’t always predictable. Sometimes, prices can still drop if investors think future growth won’t be strong enough.
Given the interest in the stock market over the last few weeks, companies beating their earnings estimates this quarter are likely to get a bigger boost than usual. But on the flip side, those missing expectations are facing larger declines.
Call-to-Action: How to Make Smart Moves This Earnings Season
Stay calm and keep an eye on the reports. Look for companies that consistently perform well and can weather any market turbulence. This is also a good time to review your portfolio and make sure it’s diversified—meaning you have a mix of investments to protect against big swings.
Disclaimer: ProsperUs Head of Content & Investment Lead Billy Toh doesn’t own shares of any companies mentioned.
