NEW YORK (TheStreet) -- Have investors been looking at company earnings the wrong way?
A new study confirms what in hindsight may seem obvious: when a company moves its earnings announcement forward, that usually means good news. And when a company delays announcing earnings, it's usually bad.
The expansive study of 4,000 companies and their earnings announcements was made over eight years by MIT Sloan School of Management professor Eric So. He concludes that investors can profit from the earnings season by identifying which companies have shifted their scheduled dates. The data shows that when firms move their announcements forward, they'll usually report better-than-expected earnings. Likewise, the firms that push back their earnings dates tend to report earnings below forecasts.
"If they're moving forward their earnings announcement date, I would think about buying ahead of the earnings announcement," So says. "If they moved it back, I would think about selling."
As companies prepare to report third-quarter results, investors may want to keep an eye out for which companies reschedule their announcements, whether forward or backward. Of course, there's no guarantee that any shift has a deeper meaning, and investors shouldn't rely on just one factor in making decisions. Still, the timing of earnings announcements could be worth noting.
So's study shows that firms that advance their earnings announcements by more than a week, on average, will outperform from their respective market indices by a 130 basis points, or 1.3%, over the one month following the calendar revision. Similarly, firms that push back their date, on average, underperform the market by 130 basis points over the month after the change.
That being said, if an investor buys stock in firms that moved forward earnings announcements and shorted those that delayed their announcements, that combination of 130 basis points on the long end and negative 130 basis points on the short side produced a historical average one-month return of 2.6% or 260 basis points. That 260 basis points per month would equate to an annualized return of well over 30%.
So which companies have been moving their earnings report dates?
Firms that have recently pushed up their upcoming earnings announcement dates include Apple (AAPL) , which moved its date to Oct. 20 from Oct. 28 on Sept. 30.
"This means that they 'advanced' their announcement date," said So. "My research suggests that they are more likely to release good news than bad news."
A handful of other firms may not offer the glowing reports that investors are hoping for.
JPMorgan (JPM) for instance moved its earnings announcement to Oct. 14 from Oct. 10 on Aug. 22. Coca-Cola (KO) shifted its announcement to Oct. 21 from Oct. 14 on Sept. 16. Investment Technology (ITG) pushed back its date to Nov. 3 from Oct. 30 on Oct. 6. Also, Tompkins Financial (TMP) moved back to Oct. 24 from Oct. 17 on Oct. 3.
-- By Andrea Tse in New York