From Nasdaq:

During the Q4 earnings season, new information from earnings announcements significantly impacts stock prices. Over the long run, earnings and stock prices move together, and earnings are crucial to stock returns. There may be temporary dislocations between earnings and prices, often due to factors like interest rates and recessions, but these dislocations are eventually resolved

Companies typically choose to announce earnings mid-week, with over 85% of S&P 500 firms opting to announce on Thursday. There is an aversion to Mondays and Fridays, with some suggesting that announcing on Friday might signal an attempt to hide poor results. Only one company, Berkshire Hathaway, announces earnings on Saturday. Timing matters, and the results of the earnings announcement show that after-hours announcements consistently see better returns.

Despite the emphasis placed on the day and time of earnings announcements, the returns do not show a clear price penalty for reporting on any particular day. Even though Wednesday sees the best average returns after earnings, the return premium for Wednesday over other days averages just half a percentage point.

After-hours announcements consistently see better returns compared to pre-open announcements. Companies that miss earnings expectations are down over 2.5 percentage points in the trading session after earnings on average, while companies that beat are up just three-quarters of a percentage point, showing a 3.4-percentage point gap.

Earnings announcements significantly boost trading volumes for stocks, with the volume being almost 50% above normal in the session before earnings and well over double normal in the session after earnings. Volumes increase even more after an earnings miss, indicating a larger impact on trading activity.

The data suggests that the timing of the earnings release matters much less than whether a company’s earnings beat or miss. Earnings are important, but ultimately, nothing matters more than whether a company’s earnings beat or miss.



Read more: Earnings Announcements Sliced and Diced