Best Performing Stocks On Earnings Reaction

Looking closer at the market’s reaction to earnings reports released in Q1 2017 will give an insight into what to expect of the 2018 full year season when presented to the Nigerian Stock Exchange (NSE), all things being equal, as Economists would say, considering the ongoing economic recovery as the monetary and fiscal authorities try to complement each other at this point.
It must however be noted that the market situation today and performance of 2016 are different, given that the factors on ground in the market are very much positive because the Nigerian economy has finally come out of recession and is continuing on the path of recovery and growth. These factors have equally reflected on the market and company fundamentals.
The Nigerian stock market is truly becoming a barometer to measure actually activities in the economy, as some analysts have argued, judging from the fact that it was the first to go into recession long before the Nigerian economy began to exhibit the traits, as it closed negative for three consecutive years. The market’s indicators also turned green month-on-month long before the National Bureau of Statistics (NBS) confirmed Nigeria’s positive GDP growth in the second quarter of 2017.
It would therefore not be out of place to postulate that the NBS GDP data for the 2017 full year would show impressive growth, as has been confirmed by the robust growth recorded by the NSE composite index last year, helped by domestic and foreign capital inflows seeking for best returns.
Investdata Research believes that price movement of equities at the time earnings reports were released to the market should guide investors and traders on what to expect when the full-year numbers eventually come, seeing how the market responded in Q1.
What you discover as market reaction when the full year earnings reports start pouring in beginning from first quarter of 2017 (between January and March) may by surprising.
The table above shows how the market reacted to positive numbers and negative reaction days as the stock’s price declined when the companies presented their 2016 full-year score-cards. The best performing stocks are those that gained the most on their earnings reaction days.
As revealed in the table above, Fidelity Bank ranked first with a huge gain of 25.6% on its earnings reaction for five trading sessions, which means it gained over 5% daily on the average within its first five days; followed by Mobil Oil with a gain of 22.03%, and ahead of National Salt’s 21.41%. Other top gainers within the period under review were: Nestle, Dangote Flour and CAP. Notice also that on the list, Consumer Goods manufacturing stocks occupied the top five positions, except for Fidelity Bank and Mobil. This should give the investing community an insight into where to look for best numbers in the coming earnings season, even as the banking industry remains a honey-pot for discerning investors, especially helped by improved liquidity in the system, powered by the recovery mode of the economy.


The worst performed in earnings reaction days for the period was Forte Oil that topped the table with 18,96 percent, next was Diamond Bank with 13.19 percent followed by May & Baker, Livestock Feed and Dangote Cement.
Let the tables above guide you at this time that prices are relatively high on the strength of liquidity and confidence as you position for expected earnings to know how to set your target if the reports are positive or negative when the market react to it. It is important to set target as every investment is against expectation, if not met exit on time to cut loss and protect your capital.
Big thanks to all the facilitators and participants that made the weekend Chart Summit a huge success, as participants eyes were opened the three tents of technical analysis and how it can enhance traders income, simple trading indicators/tools for successful traders were equally revealed to the participants. Charting of the NSE Index on long term direction movement and short term was carried out to guide investors and traders using technical indicators to know the energy behind funds that are entering the market or individual stocks and when funds are exiting the market.

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