Earnings announcements are among the most significant catalysts for stock price movements. A single earnings report can send a stock up 20% or down 30%. By screening for earnings opportunities before and after announcements, traders can position themselves for these high-volatility events. Here is how to build effective earnings screens.
Pre-Earnings Screening
Before earnings, you are looking for stocks that might beat or miss estimates. The goal is to identify setups where the market may be underestimating the company's performance.
Earnings Beat Indicators
Stocks likely to beat estimates often show these characteristics:
- Estimate revisions up: Analysts raising estimates recently
- History of beats: Company beat estimates last 4+ quarters
- Strong guidance: Previous guidance was conservative
- Industry strength: Peers already reported strong results
Pre-Earnings Beat Screen
Earnings date: Next 14 days
Estimate revisions (90 days): Positive
Last 4 quarters: Beat estimates 3+
Price vs 50-day SMA: Above
RS rating > 70
Average volume > 500,000
This screens for companies with positive estimate momentum heading into earnings.
Implied Move Analysis
Options markets price in expected earnings moves:
- Calculate implied move: Straddle price / stock price
- Compare to historical: Is implied move higher or lower than actual historical moves?
- Low implied move: Market may be underestimating volatility
- High implied move: Premium for playing earnings
Pro tip: If a stock historically moves 10% on earnings but options imply only 5%, the market may be underpricing the risk/opportunity. Conversely, if options imply 15% on a stock that usually moves 8%, the premium is expensive.
Post-Earnings Screening
After earnings, screen for stocks showing post-earnings drift or gap-and-go setups.
Post-Earnings Drift
Stocks that beat estimates tend to keep drifting higher:
- Earnings surprise > 5%: Significant beat
- Revenue beat: Top-line growth confirms quality
- Guidance raised: Future expectations increased
- Gap held: Stock held or built on initial gap
Gap and Go Screen
- Reported earnings: Last 5 days
- EPS surprise: > 10%
- Gap up > 5%
- Volume on earnings day > 200% average
- Closed in top half of range
Earnings Momentum Screening
Consecutive Beat Streaks
Companies with consistent beat histories:
- 4+ consecutive beats: Management consistently beats
- Both EPS and revenue: Quality beats on both lines
- Raising guidance: After each beat, guidance goes up
Acceleration Patterns
Look for improving fundamentals:
- Earnings growth accelerating: This quarter > last quarter
- Revenue growth accelerating: Growth rate increasing
- Margin expansion: Profitability improving
Risk Management for Earnings
Position Sizing
- Reduce position size before earnings
- Never risk more than 2-3% of portfolio
- Consider implied move when sizing
Options Strategies
Options can define risk around earnings:
- Long straddle: Bet on big move either direction
- Iron condor: Bet on smaller move than implied
- Long call/put: Directional bet with defined risk
Comprehensive Earnings Screen Setup
Pre-Earnings (Bullish Bias)
- Earnings date: 1-14 days out
- Market cap > $1 billion
- Average volume > 500,000
- EPS estimate revisions (90d): Positive
- Last 4 quarters: Beat 3+ times
- Price > 50-day SMA
- RS rating > 70
- Industry group rank: Top 30%
Post-Earnings (Drift Play)
- Reported earnings: Last 1-10 days
- EPS surprise > 5%
- Revenue surprise > 0%
- Stock gapped up > 3%
- Gap has held (current price > gap low)
- Volume on report day > 150% average
- Analyst upgrades since report > 0
Sector and Timing Considerations
Earnings Season Patterns
- Banks report first: Set economic tone
- Tech follows: Growth expectations
- Retail reports later: Consumer health
- Early reporters: Often set trends for industry
Conference Call Analysis
Numbers are not everything - also screen for:
- Guidance raised vs lowered
- Management tone changes
- New product announcements
- Strategic shifts mentioned
Important note: Earnings reactions can be counterintuitive. A company can beat estimates and still drop if guidance disappoints. Always consider the full picture: EPS, revenue, guidance, and market expectations.
Common Earnings Mistakes
- Ignoring guidance: Future outlook often matters more than past results
- Oversizing positions: Earnings moves are binary events
- Chasing gaps: Best opportunities are drift, not day-one chase
- Ignoring IV crush: Options lose value after earnings volatility resolves
Track Your Earnings Trades
Pro Trader Dashboard helps you analyze your earnings trade performance. See which setups, sectors, and timing work best for you.
Summary
Earnings screening helps you find opportunities before and after announcements. Pre-earnings, look for companies with positive estimate revisions, beat streaks, and strong technicals. Post-earnings, screen for stocks showing drift potential after surprise beats with held gaps. Always manage risk carefully around earnings since moves can be extreme and unpredictable. Use options to define risk when appropriate, and never oversize positions around these binary events.
Learn more: how to trade earnings and implied volatility explained.