Quarters, synthetically expressed by the symbols Q1, Q2, Q3 and Q4, in the financial world are an indicative time period for the release of financial reports by companies, as well as for the release of dividends.
How are the quarters composed?
Each quarter is composed of 3 months, following this pattern:
Q1 January, February, March
Q2 April, May, June
Q3 July, August, September
Q4 October, November December
How quarters are used in the world of finance?
As we mentioned, they are basically the "financial results" of publicly traded companies, which are generally required to report their quarterly numbers, the most important of which are:
What is an earnings announcement to investors? So-called earning calls are just another name for quarterly. When we talk about earning seasons we are in fact referring to the profits made by a company issued quarterly. That is why we often refer to them as "quarterly."
A "highlight" moment for investors, as the stock market moves based on expectations about future macroeconomic and corporate data trends. This is why meetings between management and the financial analyst community are so important: this is where future corporate prospects are determined before the public followed by the presentation of data for the quarter just ended.
Most companies publish their earnings in early January, April, July and October. But note: not all companies report during earnings season, because the exact date of an earnings release depends on when the company's quarter ends. It is not uncommon to find companies reporting earnings between seasons.
As for the time of release, earnings announcements are released when the markets are closed so that the reports reach as many people as possible and do not interrupt the trading session. Investors and traders thus have plenty of time to evaluate the news and choose how to act.
How to interpret quarterly data in investments
Companies, investors, and analysts use data from different quarters to make comparisons and evaluate trends. For example, it is common for a company's quarterly report to be compared with the same quarter of the previous year. Many companies have seasonal trends, which would make a comparison on sequential quarters misleading.
A retail company might make half of its annual profits in the fourth quarter, while a construction company does most of its business in the first three quarters. In this situation, comparing a department store's first-quarter results with its performance in the fourth quarter would indicate an alarming decline in sales.