What to look for in earnings reports for Post ER plays

I wanted to start this thread and hopefully @PaperhandsJB and @TheMadBeaker can put their feedback in as well along with anyone else to share ideas.

JB Beak and myself were tagged to share what we look for in Post ER plays. So I am counting on everyone to scour these things going forward to help out. It’s a lot of data to digest in short amount of time especially premarket.

So there is a multitude of data that comes with these drops. Some big some small. I’ll try to share a few examples as well here with most recents that are fresh on everyone’s mind.

1:) First thing is EPS or earnings per share. Earnings whisperer has this information at no charge listed for every ticker reporting on their estimates. I tend to use HOOD as much as it sucks and I don’t trade there the estimated EPS is listed on every ticker along with their earnings date. Also shows the previous quarters. This shows me a lot of times if they are forecasting higher EPS than previous quarter. This shows growth or slowing.

EPS beat bullish EPS miss bearish.

2:) Revenue this is also foreshadowed on earnings whisperer. This to me has seemingly been a big one the last few quarters. Some may miss EPS but show revenue growth. @TheMadBeaker shares this on his spreadsheet in the earnings thread and updates as they post. Ultimately this is what I tend to look at hardest. If growth is good especially in current times that’s major bullish. If it’s slowing it may signal bad news.

3:) Guidance most companies issue guidance as it pertains to the following quarters estimates above. This can largely be the most important thing that comes from the print. Example FDX front running their earnings and adjusting guidance and they crashed same with SNAP awhile back. These same types of remarks come on their calls to their investors. Maybe not as impactful as those two but they do make a difference.

4:) if the company sells some kind of product or service I like to look at sales numbers. We’re they up ? We’re they down ? If down and revenue is down bad combo.

5:) Share buybacks. These are almost always announced to their investors on earnings calls. This is typically bullish as fuck. Especially depending on the size as we saw LMT today. Think of it as reverse dilution.

I often read the press releases and the SEC filings premarket from the earnings that reported. Usually will try to share the bullet points of this on the earnings thread.

Now on to what to look for when you decide to play one. I know I’ve mentioned this before but I’ll put here again. I always always watch premarket for divergence from SPY or SPX if it’s drilling and SPY is going up that’s a pretty solid puts play most likely. If it’s going up or holding off to SPY drop it’s likely really bullish. These aren’t full proof but when they work they work big.

Have seen multiple 3-400 percent plays and some as much as 40x plays. Some you can be in for 10 minutes ar open and be up 2-300 percent.

I typically try to capitalize on the IV crush near open and any kind of a dip to support to try to get cheap fills.

Hopefully this is helpful to those that asked or were curious. I know Beak and JB can share some more insight on this.


Forgot one thing we talk about a lot on ER thread.

PT upgrades or downgrades. These come a lot after earnings. Sometimes might be the following day. These are important as well if company beats but gets downgrade to close to their current price may not be the best play. I try to share the WSJ average price targets and wheter they are rated as buy hold etc.

[size=3]These are the plays that have been working for me recently, would be good to see how everyone else is playing these movements. Just remember in all of these, take it into context of the overall market, for example you want to lower your support levels on a day where SPY is down. Also, look at the Daily chart to see how it has been behaving in comparison to SPY prior to earnings, it means there could be other companies in the sector could have reported well so an earnings beat is alread priced in. [/size]

[size=3]It’s been mentioned above but watch for PT upgrades/downgrades as these are a potent catalyst post-ER.[/size]

[color=#e6b400][size=5]Opening Scalps.[/size][/color] -[color=#FF0000] [size=5]HIGH RISK!!![/size][/color]

[size=3]Since these are high risk, I want there strong EPS beat + Raised guidence, at the opening candle you’ll often see a lot of profit taking, you want to play stocks with decent options liquidity as spreads are wider at open. Most of the time I’m doing this on a descretionary basis e.g I usually like to use PM support and round numbers.[/size]

[size=3]Just remember these are meant to be held for 2-5mins MAX as the second you buy your options you’re getting heavily IV crushed so have you finger on the sell button the SECOND you buy, take profit when you see it and don’t necessarily wait for resistance. [/size]

[size=3]This one isnt an earnings play, it was after Chevron’s 75b buyback but the below example is a pretty prime example of a perfect opening scalp (think this was 50-70% but I did the dumb thing and held). I’ll update this when I see an earnings play that fits it better.[/size]

[size=3]At 8am EST (5am on my chart) a lot of orders get filled on other brokers without fully extended trading so you get a little bit of a glimpse into where the buyers are so it can be used as a support area.[/size]

[color=#e6b400][size=5]Day Trades[/size][/color]

[size=3]These are the safer way to play and again should be used on stocks with heavy beats/misses (especially when the stock has been going the opposite way prior to earnings). Also once again these need to be applied to the context of the market, if SPY is drilling all day you don’t want to be holding calls for long. Look at how beat up ALLY was before their earnings.[/size]

[size=3]Then they beat earnings and greatly increased guidence[/size]

[size=3]"The Detroit-based company’s fourth-quarter profit fell to 83 cents a share, down from $1.79 a share a year earlier. Adjusted earnings came to $1.08 a share, topping the 97 cents a share expected by analysts, according to FactSet.[/size]

[size=3]On a conference call to discuss the quarterly results, the company also issued 2023 and 2024 adjusted earnings guidance ahead of expectations. Ally Financial is forecasting adjusted earnings of $4 a share in 2023 and $6 a share in 2024. According to FactSet, analysts are expecting adjusted earnings of $3.86 a share in 2023 and $4.90 a share in 2024."[/size]

[size=3]Look at how ALLY pumped at open, came back down and found support at the gap and then continued up on a day when SPY was up.[/size]