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Bespoke's Most Volatile Stocks On Earnings: April 2018 Edition

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Bespoke Investment Group

The first-quarter earnings season began Monday. With the stock market struggling lately, there seem to be a lot of bulls hanging their hopes on earnings strength to help pull the market out of correction territory.

From a seasonal perspective, stocks don't typically react all that great to their first-quarter earnings reports. Using our Earnings Screener tool, we can see how stocks typically react to earnings reports by quarter. Historically, the average stock has gained 0.07% on its earnings reaction day during the first-quarter earnings season. That's the second-worst quarter behind only the second-quarter reporting period. The best earnings season for stock prices is Q4, when the average stock gains 0.31% on its earnings reaction day. This held true last season when the average stock gained 0.45%.

(For a stock that reports in the morning before the open, its earnings reaction day is that trading day. For a stock that reports after the close, its earnings reaction day is the next trading day.)

Over the last five years, the average stock that has reported earnings has gained or lost 5.43% on its earnings reaction day. That's a huge move for investors to deal with once every three months.

Below we have broken out the average daily move for stocks reporting earnings by sector. As expected, Utilities stocks experience the least amount of volatility in reaction to their earnings reports. Notably, though, Financial stocks are the third least volatile in reaction to earnings with an average one-day move of +/-2.93%. The remaining sectors all experience average moves of roughly +/-5% or more.

At the high end of the list is Technology. As shown, the average Tech stock moves +/-7.07% on its earnings reaction day. Consumer Discretionary stocks are the second-most volatile to earnings with an average absolute move of 6.55%. Health Care ranks third at +/-6.2%, followed by Telecom and

This article was written by

Bespoke Investment Group profile picture
Bespoke Investment Group provides some of the most original content and intuitive thinking on the Street. Founded by Paul Hickey and Justin Walters, formerly of Birinyi Associates and creators of the acclaimed TickerSense blog, Bespoke offers multiple products that allow anyone, from institutions to the most modest investor, to gain the data and knowledge necessary to make intelligent and profitable investment decisions. Along with running their Think B.I.G. finance blog, Bespoke provides timely investment ideas through its Bespoke Premium (http://bespokepremium.com/) subscription service and also manages money (http://bespokepremium.com/mm) for high net worth individuals. Visit: Bespoke Investment Group (http://bespokeinvest.com/)

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