What is an Earnings Disappointment or Earnings Miss?
This is usually great for bears as it is when a company reports quarterly or annual earnings that are lower than analyst expectations. Analysts forecast earnings by taking into account past performance, a company's guidance and various market conditions. When a company misses their earnings estimates, they did not do as well as they said they wanted to in their previous guidance. Also, the company did not do as well as what analysts believe the company could’ve done in the current business environment.
Why You Care
A stock's price will generally fall sharply after an earnings miss and then there will likely be a gradual decline in the stock price as time goes by.
However, investors may already know that the company isn’t doing well from various news and analyst reports. In these cases, investors may have already sold the stock and drove the price of the stock down before the quarterly earnings were reported. So, even though a company misses their earnings estimate, if investors already expected it, the stock price already reflects that and may not fall any further.
If a company has been beating expectations most of the time and there is an earnings miss, it can be hard on the stock price.
Earnings Surprise (Beat),
Quarterly Earnings Report,
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