Below is a distribution chart showing the one-day price reaction (%) to earnings reports for the 2,512 stocks that reported this earnings season between July 11th and August 18th. Stocks that beat earnings estimates are in green, stocks that reported inline estimates are in blue, and stocks that missed estimates are in red. As shown, the 1,603 stocks that beat earnings estimates averaged a one-day gain of 2.07% on their earnings reaction days. There were still plenty of beats that saw price declines, however. The 227 companies that reported inline numbers were punished for just meeting estimates. They averaged a one-day decline of 1.45% on their earnings reaction days. Finally, the 682 stocks that missed earnings estimates averaged a one-day decline of 2.88% on their earnings reaction days. Given the negative share price reaction to both misses and inline reports, is it any wonder why companies work so hard to beat numbers on a quarterly basis?
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