If you’re an investor or a business owner running a public company, then being aware of an earnings calendar is absolutely essential. The main reason for this? Whenever a company is traded publicly, it has to play by the rules of the Securities and Exchange Commission (SEC). You will likely need to know about stocks and an earnings calendar at some point in your business career.
As explained by Investopedia, this means releasing “earnings reports after the end of their first three quarters, and both quarterly and annual reports after their fiscal year ends.” The main reason is that current and potential investors use this information to remain up-to-date on the company’s performance.
With that in mind, let’s define what an earnings calendar is, as well as the basics of earnings reports.
What is an Earnings Calendar?
An earnings calendar, as defined by Farlex Financial Dictionary, is the “schedule according to which various publicly-traded companies announce their earnings for a certain period.” The earnings are usually announced by quarter-end — and end-of-year. “The earnings calendar organizes these announcements by date and company.”
For example, an earnings calendar “may provide an alphabetical listing of all companies making earnings announcements on a certain date in October, also indicating the time and manner of the announcement.” And, as noted above, earnings calendars are used for investor convenience.
More specifically, wallmine adds that an “Earnings date is the date of the next release of a company’s financial report.”
Furthermore, an earnings report date “is the date of an official announcement about a company’s profitability for a specific period.” Additionally, in the private sector, “a quarterly finance report is a financial report that covers three months of the year, which is required by numbers of stock exchanges around the world to provide information to investors on the state of a company.”
Here are some examples of leading earnings calendars:
The Timing of Quarterly and Annually Reports
An earnings calendar is essential for analysts, investors, and traders if they want to be kept up-to-speed throughout the earnings season. This season typically starts one or two weeks after the end of each quarter. Although this can vary, it’s usually a couple of weeks after March 31, June 30, September 30 and December 31 and lasts for roughly six weeks.
Moreso, as noted on InvestingAnswers, a company’s fiscal year always “reflects the date of the calendar year in which it ends. As an example, “the financial operations of the federal government are carried out in a fiscal year that begins on October 1 and ends on September 30.”
In the past, the “standard required companies to file earnings reports no later than 45 days after the end of their first three quarters, and both quarterly and annual reports no more than 90 days after their fiscal year ends,” explains Investopedia.
The SEC in 2002, however, made the decision “to make information available to the public in a more timely manner.” These “new rules tightened these 45- and 90-day requirements to 35 and 60 days, respectively.”
It should also be noted that the faster filing deadlines are only required for public entities “that have a public float of at least $75 million and have been subject to the Securities Exchange Act of 1934” for a minimum of 12 months. “The public float is the value of all shares that are in the hands of outside investors.”
FINRA.org adds that it’s common for companies’ quarters to sync with the calendar year. “But some have their own fiscal calendar, and their earnings report release schedules follow accordingly.”
What to expect during the earnings season.
When is the unofficial “kick-off” of earnings season? Traditionally, it occurs “when aluminum giant Alcoa Inc. reports its earnings.” Because Alcoa was one of the first companies to release earnings following each quarter, it was often “seen as a predictor for the quarter overall.” However, while Alcoa “still starts earnings season, it’s no longer in the Dow, and is considered less of a bellwether.”
During an earnings season, a company issues a press release that contains information like sales and earnings. The SEC doesn’t require a press release, but, if a business does issue a statement, it must file a Form 8-K with the SEC.
“Companies typically issue their press releases before the market opens or after the market closes,” Howard Silverblatt, senior industry analyst, index investment strategy for S&P Dow Jones Indices told FINRA.org.
On top of press releases, companies will also schedule earnings conference calls. “During these calls, management might give more color on the quarter and also guide the company’s future performance.”
While it is “customary for companies to issue quarterly earnings press releases,” it’s not mandatory. So, why do they make this information public? While, when a company is thriving, they want “to disseminate the numbers as soon as possible.” On the flip side, if the results are negative, “it allows companies to prepare their investors before they file their mandatory quarterly earnings disclosures with the SEC.”
Understanding the Quarterly Earnings Report
The contents of a quarterly earnings report contain a quarterly update of all three financial statements, state Investopedia. These include the income statement, the balance sheet, and the cash flow statement. These reports also share with investors important information like sales, expenses, and the net income for the most recent quarter.
Also included may be a comparison to the previous year, or possibly to the previous quarter. Some quarterly earnings reports may also include a brief summary and analysis from the CEO or company spokesman. It’s also the norm to throw in a review of previous quarterly earnings results.
Quarterly earnings reports are often “backed up by the company’s Form 10Q. Form 10Q is a legal document that has to be filed with the Securities and Exchange Commission every quarter. “The 10Q is more comprehensive in nature and provides additional details behind the quarterly earnings report,” such as the essential changes the company experienced since the last quarter.
Want to know the exact date and time of the quarterly earnings report announcement for a specific business? Then you’ll need to contact the company’s investor relations department. As a general rule of thumb, “the 10Q is usually published a few weeks after the quarterly earnings report.”
How Earnings Reports Impact Stock Prices
As the good folks over on Investopedia explain, reporting requirements for the SEC “effectively rule the calendar year of the stock market.” Everyone from analysts, investors, and traders eagerly anticipate company quarterly reports, which are also subject to massive speculation. Suffice to say; when earnings reports are released, it can be an incredibly busy time of year.
“The reports arrive on schedule and in an avalanche, and each is followed by a wave of expert analysis and trader re-positioning.” Public conference calls proceed with the release of earnings reports. Participants on these calls often include “top corporate executives and active investors in which the prospects for the next quarterly report are discussed.” The discussion, in turn, builds towards the anticipation for the company.
Before the release of earnings, analysts share their estimates on the health of a company. If the company does better then estimate, then it “beat” the forecast. Providing an estimate can lead to a jump in the company’s stock or even ramp-up production or revenue.
However, if the ratings are off and the company “missed,” it’s an estimate stock prices may drop. A price drop isn’t always a bad thing since this could motivate traders to sell their stock.
While these estimates don’t always dictate stock prices, it does provide an insight into how the company will fare in the next quarter or year. What’s more, some investors chose not to partake in earnings seasons because there are simply too many human factors influencing prices.
Preparing a Quarterly Financial Report
As a business owner or investor, you’re most likely relying on a financial expert. They can either prepare the summary for you or advise you on financial reports. But, you should at least be familiar with the basics of these reports. It not only guides you in playing the stock market more wisely, but it will also give you the chance to improve your business.
This way, creditors, suppliers, and stockholders have the data needed to track the performance of your company. More specifically, these reports allow you and key stakeholders to:
- Track the revenue, expenses, and profitability of a company.
- Make predictions on where the company is going.
- Map out a more accurate budget.
- Improve business processes and procedues.
- Generate more customizable reports.
Every financial report must consist of a balance sheet, income statement, and cash flow statement.
A balance sheet displays the financial status of a business during a specific timeframe. In this case, it would be over three months. As Paul Cole-Ingait writes on Chron.com, this “compares your business assets against the owner’s equity and liabilities.” The following accounting equation: Assets = Capital + Liabilities is needed to come up with these figures.
Usually, a spreadsheet in Excel or Google Sheets works just fine to create a balance sheet. The balance sheet summarizes a company’s assets (what it owns) and liabilities (what it owes). By subtracting these figures, you’ll be able to determine the owner’s equity.
Your income statement shows the profits and losses of a business over a specific time. It provides a bigger picture of the financial performance of a company. By subtracting total revenue from total expenses, you’ll get a net profit or loss for the quarter. Without an income statement, a balance sheet would be incomplete.
Cash flow statement.
By examining operational activities, investing activities, and financing activities, you can tell how much money a company brought in or lost during an exact period. Perhaps most importantly, this allows you to identify and resolve any cash flow problems.
When Must Financial Reports Be Prepared?
Well, that depends on the public float of the business. In case you’re curious, this is just the portion of shares that are owned by public investors.
Non-Accelerated Filers and Smaller Reporting Companies
“A company with a public float less than $75 million is classified as a non-accelerated filer by the SEC, while a public company that has no public float or has revenue less than $50 million is considered a smaller reporting company,” writes Teresa Nguyen on Chron.com.
These businesses “have the most generous timelines to prepare their financial statements.” They have within “45 days of each quarter-end and 90 days of each year-end” to file financial statements with the SEC. Also, they must prepare these statements four times annually.
Large Accelerated Filers
Companies having a public float of $700 million or more are considered large accelerated filers. As such, they “must file its quarterly financial statements with the SEC within 40 days of quarter-end. And, “its annual financial statements within 60 days of year-end.”
These may seem like short time frames. But, believe it or not, companies like Amazon and Microsoft “prepare and file their financial statements well ahead of the deadlines.”
Finally, there are accelerated filers. These types of companies possess “public float greater than or equal to $75 million, but less than $700 million.” They’re “required to file its quarterly financials within 40 days of quarter-end and its annual financials within 75 days of year-end.”
However, they “have 15 extra days to prepare their year-end financial statements. But, these statements must “adhere to the same 40-day deadline for the first three quarters of the year.”
The filing statements information may sound straightforward, but there may be changes in filing status. Filing status changes, generally, is when stock prices or notable increases or decreases. “
The SEC requires that a public company determine its filing status as of the last business day of its second-quarter for the prior year,” adds Nguyen. “Therefore, financial statement deadlines for the fifth year would be based on the public float at the end of the second quarter in year four.”