Willians Astudillo is healthful enough to return, the Twins decided after Saturday’s doubleheader. The team announced late Saturday that the catcher/utilityman could be activated for Sunday’s game to make room for reliever Fernando Romero, who owns a five. Sixty-three ERA in seven important league video games this 12 months joined other pitchers headed lower back to Class AAA Rochester.
Tyler Duffey is going lower back, too, after dealing with three batters Saturday and placing out all three. Duffey’s one-day pass because the Twins’ unique twenty-sixth man expired once the doubleheader did, and he’s headed again to Rochester for the second time in 12 months.
Meanwhile, the Twins placed Martin Perez on the paternity list and activated Kohl Stewart to begin the second recreation of the doubleheader. Stewart, too, was sent properly back to Rochester after the game despite earning a win. Perez is planning to begin his schedule on Sunday. Why? Well, think about it; it makes sense. We tend to believe that more people have been hurt during earnings season than at any other time of the year.;.
If you see a stock moving higher and higher, you’re convinced because the analysts have told you that this company is the second best thing to slice bread. They have raised their expectations several times, so you go for it. You buy the stock, and they announce earnings and “boom” the next morning. Even though they beat the numbers, you’re down 6 dollars a share. What’s up with that?
There are several mechanics at work during an earnings release. Naturally, you have the raw numbers themselves, suc. For example, did they beat the estimates? Sometimes it appears as they have, but how’d they do it? If they did it on falling revenues, they accomplished the feat by cost-cutting or playing the currency spreads. None of them are indicative of great growth. Then we have the issue of how much they beat the estimates by. Quite often, beating by a penny is so
much more a matter of creative accounting than a real estimate of business growth.
Then, of course, there is the all-important “guidance”. Remember that when earnings are released, it’s already old news. They are reporting numbers for the quarter that has already passed. No one cares about the history of this business, or they would know it repeats itself, and stocks wouldn’t be this high as it is, but that’s another story. People want to know what the company is doing now and what they think they will do in the future. If the guidance is mush, soft, soggy, or a million other
descriptive words, then you can bet that the stock is going to take a hit.
If you study enough charts of earnings seasons, you will see something quite startling. Although the averages can move higher during earnings season, the chances of your stock selection moving higher are pretty iffy. The risk-reward scenario of walking a stock over the reporting session is pretty horrid; frankly, I advise against it. That always brings out the howls from the crowd that says, “Yeah, well, I sold XXX ahead of earnings, and it gaped up 6 dollars!” That’s certainly true. It happens to hundreds of companies. But that is less painful than being in a stock that gaps DOWN 6 dollars because they didn’t like the quality of earnings, the margins, or the guidance.
As we enter the season, the best you can do is ride the stock up into the earnings, then bail out the day before the actual hits. You are going to miss some of the ones that explode higher, no doubt. But you won’t be in any of the ones that implode and open down a ton. If you see a stock on our consider buy list and it’s got earnings coming,
realize that the only time we will hold through earnings is if we’ve screwed up and got the earnings date wrong, or we have some really really good reason to want to take the chance. Do some work on YHOO, Market Watch, or what you have, and try to ensure not in a reporting company. Sometimes, the dates aren’t correct; sometimes, the company will announce a day ahead. It will help if you stay vigilant.
