Analysts Surprised by Seasonality May Boost Stocks, Study Finds
- Research shows stock watchers underestimate revenue swings
- Shares outperform in months of seasonal earnings surprises
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Some companies have earnings heavily weighted to one quarter of the year. Macy’s Inc., for example, makes a large part of its profits from October to December; Six Flags Entertainment Corp. does most of its business in the summer months.
Obvious, isn’t it? Still, analysts tend to underestimate seasonality, and this can lead to higher returns for investors when those companies report quarterly earnings, according to research published in the The Review of Financial Studies.