Step-by-step tutorial: how to research a stock before its earnings report using Diplyzer — review earnings history, assess expectations, check technicals, validate fundamentals, and understand the risk.
Earnings season is one of the most consistent opportunities in trading — and one of the highest-risk periods for the unprepared. The companies that beat expectations often gap up significantly; those that miss can crater overnight.
This tutorial teaches you how to build a complete pre-earnings research thesis using Diplyzer in five systematic steps.
The market does not just react to whether a company beats or misses earnings. It reacts to how far the result deviates from what was already priced in — the "expectation gap."
A company that beats EPS by 2% when the market expected a 10% beat may still sell off. A company that "misses" but provides strong forward guidance may rally. Understanding what is priced in before the number drops is the entire game.
Before anything else, understand the pattern:
"Show me [company]'s last 8 quarters of earnings results: EPS estimate vs. actual, revenue estimate vs. actual, and the stock's price change in the 48 hours following each report."
Look for:
"What is the current analyst consensus EPS estimate for [company]'s upcoming earnings? What is the revenue consensus? How have these estimates changed in the last 30 days?"
Importantly, estimates that have been rising into the print suggest momentum — but also higher expectations to clear. Estimates that have been falling (lowered expectations) create a lower bar that is easier to beat.
Also ask:
"What is the implied earnings move for [company] based on options pricing? What magnitude of price move is the options market pricing in?"
The implied earnings move (calculated from at-the-money options) tells you what the market is pricing in for volatility. If the historical average move is 5% and the options market is pricing 3%, options are cheap relative to history.
Regardless of fundamentals, the technical setup going into earnings matters:
"Show me the technical chart for [company] over the last 3 months on the daily timeframe. Where is price relative to key support and resistance? What is the RSI reading? Is the stock technically strong or technically weak going into earnings?"
Technically strong into earnings (near highs, RSI 50-65, in uptrend): Market participants are positioned bullishly. A beat may be well-received; a miss could trigger sharp selling.
Technically weak into earnings (near lows, RSI below 40, in downtrend): Pessimism is priced in. A miss may be "already expected" and result in minimal selling; a surprise beat could trigger a sharp recovery.
"What has [company]'s revenue and earnings growth trajectory been over the last 4 quarters? Are gross margins expanding or contracting? What is the analyst consensus on forward EPS growth?"
Also check:
"What did [company]'s management say about the business outlook in their most recent earnings call? What forward guidance did they provide and how does the current consensus compare to that guidance?"
Reading earnings call transcripts reveals what management is actually communicating vs. what the headlines say.
Insiders cannot trade during "blackout periods" before earnings releases (typically 30 days prior). But in the months before the blackout, their activity is revealing:
"What have the insiders at [company] been doing with their personal stock in the last 3 months? Were they buying or selling before the pre-earnings blackout period?"
Heavy insider buying in the 2-3 months before an earnings report can signal confidence in the upcoming result. Heavy selling in the months prior can be a warning.
"Build me a pre-earnings dossier for [company] ahead of their upcoming earnings report. Include: (1) last 8 quarters of EPS and revenue beats/misses with stock reactions, (2) current analyst consensus EPS and revenue estimates and any recent changes, (3) the technical chart with key support/resistance and RSI, (4) the most recent quarter's gross margin and operating margin trends, (5) what management said on the last earnings call, and (6) insider activity in the last 90 days."
Common quantitative frameworks for analyzing earnings announcements include:
Pre-Earnings Expectation Analysis: Evaluating whether consensus estimate revisions and historical beat rates are already reflected in pre-announcement price momentum.
Post-Earnings Reaction Analysis: Analyzing the variance between reported earnings, revenue, and forward guidance against the market's initial price reaction and trading volume.
Volatility & Implied Move Evaluation: Quantifying options-implied volatility against trailing historical post-earnings moves to assess whether market pricing aligns with typical volatility regimes.
"Which S&P 500 companies are reporting earnings in the next 7 days? For each, show me the consensus EPS estimate and the stock's 52-week return relative to the index."