Ok, you're new to this business, so let me give you a lesson (newwurldmn has already hinted at what it's going to be) .... People "don't do" spoon feeding in this business. The books ain't going to give you the answers. The papers ain't going to give you the answers. Your colleagues, friends and acquaintances ain't going to give you the answers. The internet and its forums ain't going to give you the answers. See a pattern ? Want to know the reason ? (a) Because there's no such thing as "the answer" in this business. There's an old saying, "the market will remain irrational longer than you can remain solvent". The market never does anything consistently ... otherwise there wouldn't be enough beaches in the world for all the billionaires to sit on. (b) Because those people who have spent years working to understand the market and its irrationality and have managed to find a (hopefully) reduced-risk path through maze are not going to ....yep... those words again ... spoon feed you what they've spent years learning.
Another point is the key metrics or data points vary from company to company. For some it is an adjusted ebitda or gaap figure, etc. usually the analysts play along with what ever data points they are spoon fed by management.
Thanks! I would have to question your point. There's many examples, but the one that prompted this post was nyse:GNC. Following their recent earnings announcement on 10/26, they plunged over 30%... certainly not a tiny fraction! Yes to management guidance... @killshottrader addressed this point in his post.
Excellent, thank you. As I start to listen to read the financial reports, and listen to the calls, I'm confused by how a company can beat earnings by a significant percent, yet the price takes a nose dive at market open!? I was that trader "looking just at the quarter's EPS" . That's why I posted here. I'm trying to identify the set of metrics that results in an immediate market move.
But what does the previous quarter's earnings signal about earnings going forward? If results do not meet expectations, is there a reset on future expectations? The answer to that question can explain market reaction.
Yes, good point. I discerned this one as I listened on the Southwest Air Call (nyse:LUV), and they focussed on "Cost per Available Seat Mile" (CASM) as a metric. On the Western Digital (nasdaq:WD) call, they referred to Price Per Megabyte (PPM) for both Hard Disk Drives (HDD) and Solid State Drives (SSD). Both of the above are examples of industry-specific metrics.
..but it's not just earnings that drives the market reaction. I've seen some companies miss earnings by 1%, and the market responds with a sharp downspike; others post the same loss, and there's little movement at all. That's why I posted here... I'm trying to get my arms around all the factors that can drive an immediate market reaction.