Alcoa (AA) is set to kick off third quarter earnings season after the close today. In times like these, it's as important as ever to "know your stocks," and one of the many databases that helps investors do this is our Earnings Report Database. In this unique program, we take earnings analysis to the next level by not only highlighting how a stock's historical reports have compared to analyst estimates, but also how the stock price reacts to the report. Users of this database can easily find how a stock or basket of stocks typically reacts to earnings in order to prepare themselves for future quarterly releases. To develop trade ideas, traders can also see how stocks trade after gapping up or down on earnings. If IBM opens down $2 on earnings, what does the stock typically do next? This database can answer that question and much more for the majority of US stocks that trade today.
Below we provide a snapshot of the data we have for Alcoa in our database. The same information is available for more than 2,700 US stocks. As shown, Alcoa does not beat earnings estimates often (just 35.7% of the time), so expectations are not high for the company. When the stock has beaten estimates, it has averaged a gain of 2.02% on the day in reaction to earnings. When it has missed estimates, it has averaged a decline of 2.49%. So what should investors do if the stock gaps up or down at the open tomorrow after its report this evening? History says to sell regardless of the gap direction. When it has gapped up at the open, Alcoa has averaged a decline of 1.74% from the open to the close. When it has gapped down, it has averaged a further decline of 0.27%. As shown below, AA has gapped up following 6 of its last 7 reports, and it has gone down from the open to the close 5 of those 6 times.
Want this information for all of your holdings or for stocks you may be interested in trading this earnings season? Call 914-315-1248 or email info@bespokeinvest.com to learn more about the database.
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