Making the Most of Earnings Surprises

2019-09-24T13:38:43+00:00September 24th, 2019|Earnings Derivatives, Earnings Season|

The Post Earnings Announcement Effect Drift (PEAD), is a well known market anomaly that has been documented in various studies of both US and international markets going as far back as 1968. PEAD is the tendency for a stock’s cumulative abnormal returns to drift after earnings announcements, sometimes for a few weeks, sometimes for several months.  This phenomenon is more extreme in small caps.

Multiple academics have attempted to figure out why PEAD continues to reoccur.  In Earnings Announcements […]

Do Earnings Really Matter Anymore?

2020-01-06T14:07:18+00:00September 2nd, 2019|Earnings Derivatives, Earnings Season|

In a world full of adjusted EBITDA and hype, do earnings really matter anymore?   It turns out they do, and in a nuanced way that may surprise a lot of investors. Earnings season has become increasingly important over time, but investors need to carefully consider the broader context beyond the headline number. As a recent academic paper notes, in the current environment investors need to be on top of changes in firm fundamental information than ever before.

Influence of earnings over time

In theory the long run value of a firm […]

Go to Top