Why do companies postpone earnings announcements?
By Matt Lee
If a company announces that it is filing later than expected, investors take this as a sign of a negative earnings surprise, and a near future sell-off may follow. Price reductions can be further enhanced by noise traders and technical analysts who may follow those who are selling their stock - sometimes the stock may actually rise without any valid reason right before the sell off. The smart investor should keep in mind that the best thing for them to do during a time like this is to consider why the company is delaying its release, and/or wait for information to be released concerning whether management's reasons are valid, and see how the new data corresponds to the original investment thesis.
During the course of a fiscal year, a company will report earnings on a total of four separate occasions: three quarterly statements filed as 10-Qs, and one annual report with Quarter 4 data within, filed as a 10-K. The SEC requires companies to file 10-Qs no later than 45 days after the end of a quarter, and 10-Ks must be being submitted no later than 90 days following a company's fiscal year-end. Occasionally, companies will postpone an earnings release for some unforeseen reason. However, most often, the delay will be a result of the company not completing the report on time due to audits taking longer than expected, inexperienced officers completing their first report and the firm losing some or all of its financial data due to a technical error, fire or theft. Although a company may file a report later than expected, this will sometimes have an impact on its stock price.
By Matt Lee
If a company announces that it is filing later than expected, investors take this as a sign of a negative earnings surprise, and a near future sell-off may follow. Price reductions can be further enhanced by noise traders and technical analysts who may follow those who are selling their stock - sometimes the stock may actually rise without any valid reason right before the sell off. The smart investor should keep in mind that the best thing for them to do during a time like this is to consider why the company is delaying its release, and/or wait for information to be released concerning whether management's reasons are valid, and see how the new data corresponds to the original investment thesis.
During the course of a fiscal year, a company will report earnings on a total of four separate occasions: three quarterly statements filed as 10-Qs, and one annual report with Quarter 4 data within, filed as a 10-K. The SEC requires companies to file 10-Qs no later than 45 days after the end of a quarter, and 10-Ks must be being submitted no later than 90 days following a company's fiscal year-end. Occasionally, companies will postpone an earnings release for some unforeseen reason. However, most often, the delay will be a result of the company not completing the report on time due to audits taking longer than expected, inexperienced officers completing their first report and the firm losing some or all of its financial data due to a technical error, fire or theft. Although a company may file a report later than expected, this will sometimes have an impact on its stock price.