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Yesterday TLRD released their first quarter results after market and today they are trading down 20%.

Why did their stock price fall 20%. The first quarter report looked to be positive. Is there something that I am missing? Was their another factor that impacted the price? Was this just random?

Are their any signs or methods to avoid being caught in the above situation?

A link to the First Quarter report for reference:

https://ir.tailoredbrands.com/press-releases/detail/1844/tailored-brands-inc-reports-fiscal-2018-first-quarter

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    It might have been a positive report, however did it meet market expectations? – Victor Jun 14 '18 at 5:32
  • It also met market expectations. zacks.com/earnings/earnings-calendar# – Mr Gibbous Jun 14 '18 at 8:20
  • TLRD was on the 13th of June. It beat market expectation by 0.02. I am not sure on how much a company should beat expectations by. How much should a company beat expectations by? – Mr Gibbous Jun 14 '18 at 8:23
  • Also, when a company is expected to do well the price tends to go up in anticipation of the results, so by the time the actual results come out they are already priced into the stock. – Victor Jun 14 '18 at 8:32
  • ok thanks, I'll keep that in mind. Do you have any advice for materials that I can read to learn more about fundamental analysis? Books, specific websites maybe? – Mr Gibbous Jun 14 '18 at 8:43
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Never forget, also during the earnings season: stock prices are a function of demand and supply. When the market already expected the good results, demand may not increase. If expectations were even higher, demand will drop and supply will potentially increase -> stock price will drop.

Also: demand is driven by expectations of future performance. Earnings are a thing of the past, so most investors are interested in the outlook or guidance. Maybe the company dissapointed with their projections for the next quarters?

What may help in the future is to check analyst estimates. Not only the consensus, but the full range. If earnings come in significantly higher than the highest estimate, then you could say there's a real surprise that may drive demand / prices higher. If earnings come in slightly above consensus, the market already expected the numbers and thus there is more needed to drive demand higher (for instance an increased outlook that is higher than analyst estimates for that period).

Edit: A number of financial sites publish analyst estimates, for instance Reuters. See for this particular company: https://www.reuters.com/finance/stocks/analyst/TLRD.N I guess 'significantly higher' is a bit subjective and depends on the type of company. But generally, if the range of estimates is quite tight, you need less to surprise the market than when the range is wide.

  • Could you elaborate on what is "significantly higher" than expectations? I have absolutely no idea. Also how may I go about checking the full range of analyst estimates? So far I have just been looking up the company on zacks: zacks.com/earnings/earnings-calendar# How do I know if a company only slightly beats earning estimates? TLRD only beat estimates by 0.02 which was 4.17%. Is there a general rule where estimates have to be beat by 30% or 50% or something? Should I keep away from companies that only beat the estimates by less than 10%? Thanks – Mr Gibbous Jun 14 '18 at 8:29
  • Maybe it's an idea to check historical earnings and the price reaction afterwards. You can find the previous 5 ranges on Reuters (see posted link), the company website for the exact dates and finance.yahoo.com (or similar) for historical prices. That could offer some additional indication. – T.Forstmann Jun 14 '18 at 9:54
  • You are not going to learn how to predict share price behavior after an EA because as you have demonstrated, TLRD announced decent results and yet it got clobbered. There's no one size fits all answer. Back in the day when I traded EA's, we would listen to the conference call and if something notable was said and buyers/sellers started driving price, we bot/sold. Be that as it may, if you want to research past performance, Zacks offer info from the the past 10 EA's (Estimate, Reported, Surprise, % Surprise). zacks.com/stock/research/tlrd/earnings-announcements – Bob Baerker Jun 14 '18 at 18:47
  • Thanks for the Advice Bob, When listening to a conference call, what specifically is notable. What can make the price move? Any tips would be much appreciated. Also thanks again for the Advice T.Forstmann – Mr Gibbous Jun 26 '18 at 9:31

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