4 Trends Set to Impact Earnings Season 2024 and Beyond

The financial ecosystem is ever-evolving, and the 2024 earnings season is no exception. Consistently, each earnings period generates a flurry of activity among investors across the globe as publicly traded companies release their quarterly or annual earnings reports.

For investors, this event indicates stock market performance and dictates subsequent strategic portfolio decisions.

We have observed significant transformations in the earnings season due to many factors. Technological advancements, other dynamics such as global economic conditions, and regulatory changes reshape earnings seasons in ways we haven't seen before. Here are the trends set to impact earnings season this year and beyond

Digitization

With the continued adoption of powerful financial technologies, companies now have sophisticated digitized tools and software at their disposal, making the process more efficient in monitoring potential losses and forecasting projected returns. These technologies offer real-time insights and data-driven analytics, enabling faster, more accurate reporting and projections.

Cybersecurity is another area of digitization that impacts earnings season. Companies must implement cybersecurity tools to prevent the loss of data and PII (Personal identifying information), which can lead to substantial fines, lawsuits, and loss of business.

ESG Factors

Another distinct feature of 2024's earnings season is the increased scrutiny of Environmental, Social, and Corporate Governance (ESG) factors. With growing awareness and concern about sustainable business practices, stakeholders are more alerted than ever about ESG disclosures. The earnings season is not merely about profit and loss anymore; it also includes whether the firm is aligning its operations with the broader societal objectives. For companies, this means they have to look beyond traditional financial metrics and include sustainability targets in their reports, creating a different perspective during the earnings season.

Lingering Pandemic effects

Moreover, the impact of the COVID-19 pandemic has long-term effects on how companies report their earnings. With industries and economies recovering from the shake-up caused by the pandemic, this 'new normal' has been reflected in the 2024 earnings season. In their reports, companies are factoring in business disruptions, shifts in consumer behavior and demand, and supply chain adjustments, among other factors. This shift makes a significant difference in the earnings season by introducing new considerations for businesses and investors.

Geopolitical dynamics

Geopolitical dynamics also play a crucial role in making the earnings seasons different. The continuous changes in trade policies globally profoundly impact companies' bottom lines. With countries adopting preservationist measures, trade disputes, and tariffs are causing considerable fluctuations in earnings. Companies must navigate these challenges and forecast their potential impacts while reporting their earnings. Consequently, a higher degree of volatility may occur during earnings season.

The earnings season in 2024 may differ from its traditional form due to factors such as digitization, sustainability, pandemic impacts, and geopolitical events. These factors provide an evolved perspective for assessing a company's performance. All these changes encourage investors to consider their insights, shaping the future of investing decision-making.