A newly launched index, tracking off-trend earnings announcements from US firms, had a score of 144 for Q2 2022 – higher than the Q1 2020 reading of 133, when companies were ‘grappling with the beginning of the Covid-19 pandemic’.
The Late Earnings Report Index (Leri) from corporate data firm Wall Street Horizon tracks how many earnings date confirmations are later or earlier than their historical norm. A reading over 100 demonstrates more companies are delaying reports – signaling that investors should keep a more careful eye on the market, according to Wall Street Horizon, which says the ‘timing of a firm’s earnings release is one indicator of its financial health,’ citing findings from recent independent academic research measuring the potential for portfolio gains from earnings announcement trading signals.
The Q2 2022 score – the result of the index ‘trending higher in recent quarters’, indicates that US companies are exhibiting signs of uncertainty regarding growth expectations, says Wall Street Horizon.
‘The Leri is derived from many years of tracking corporate body language, or the non-verbal cues that publicly traded companies send to the market both intentionally and unintentionally that impact volatility,’ says Barry Star, CEO of Wall Street Horizon in a statement accompanying the data.
June research from the company pointed to earnings announcements and date changes as being the ‘most impactful’ events for investors. Investors have faced losses because earnings dates were missing, incorrect or had changed, according to annual research from Wall Street Horizon.
It also found that investors are apparently increasing their use of corporate event data to get ahead of volatility. Still, half of surveyed investors saw a loss due to an earnings date that was missing, incorrect or had changed. Of that 50 percent, 41 percent said they had missed a trade, 24 percent said issues with earnings dates resulted in a poorly timed investment and 24 percent said it had affected trading strategies.
The research also noted a shift in the most-followed corporate event types, with spin-offs, buybacks and dividends dropping out of Wall Street Horizon’s list of top five corporate events followed by investors.
Instead, the firm said earnings announcements and earnings date changes are considered most important to follow, with investor and analyst events, conference presentations and M&A rounding out this year’s top five.