I’ve been watching my Ford stock gradually rise over the last couple of weeks, even when the market is down. So, this morning I hear on CNBC that Ford will, or is expected to, release its quarterly earnings…$1B. Especially because this is Ford’s 4th consecutive quarter of profitability, these earnings are considered significant. Logically, this why its stock price has been rising.
So how does “the street” know this? Specifically, what data is being looked at? I have to assume its data that is available to the public. Those into black helicopters would say that insiders are releasing data that should be held secret until the formal release of earnings. I doubt that is the case.
Investment banks typically have analysts who follow specific companies and industries. They try to predict what the stock price will be based on valuation models they create based on publicly available data (ie financial statements) as well as forecasts provided by the companies. ou can do this yourself if you like. Just Google “stock valuation” for some common techniques.
Basically “The Street” doesn’t like surprises. If they are following a company that predicts x amount of sales this quarter and all of a sudden it turns out sales will be .75x, the stock tends to react badly.
I’m sure it’s not difficult to find a few representative Ford dealers across the company and ask them “How’s business?”. I’m sure some analyst firms have those sorts of connections; plus banks that tell you how many car loans they issued this quarter, etc. It’s not inside information if it didn’t come from someone with inside knowledge of the company’s books. Business trends, sales levels, and such are probably data that is collected bought and paid for, so anyone who wants to pay can peruse the stuff. If your job is telling people what Ford stock will do, you probably pay an analyst service for hard data.
There is also significant additional detail not tied directly to a specific company that can give analysts clues on what results might be. For example, they may know how auto sales correlate to things like employment, interest rates, fuel costs, or other economic indicators. This is all public information. They make educated guesses based on all of the publicly available information.