Earnings season has brought some great results from many companies, as net-income gains have pointed to solid performance from a fundamental standpoint. Yet in many cases, great earnings news is followed by a falling stock price. Why aren't investors happier about positive results?
In the following video, Dan Caplinger, The Motley Fool's director of investment planning, explains how stocks can fall even after great earnings. Dan explains how AT&T (NYSE:T), Boeing (NYSE:BA), and Ralph Lauren (NYSE:RL) have all beaten expectations that investors had for their most recent quarters. Yet Dan reminds investors that the stock market is a forward-looking mechanism, and when companies like these don't give the positive outlooks that shareholders want to see, a stock-price drop often follows. Dan concludes that looking back at past results is mostly useful for what they tell you about the future, and smart investors maintain a future-looking focus in their investing choices.
Dan Caplinger and The Motley Fool have no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.