Although a stock price increase following a beat in earnings is common, this shouldn't be assumed always to occur. Even after exceeding analyst expectations for both sales and earnings per share (EPS), a stock's price frequently declines.

5 reasons for stock's low performance despite good quarters

1) Panic selling trend

 Investors may buy heavily before the earnings report is revealed when, for whatever reason. Now, even if the earnings exceeded expectations by a wide margin and met investors' expectations, the stock price could still decrease afterward. This could be due to the stock price being at an all-time high or 52-week high, or it could be due to investors' lack of expectation that it will rise further in the near future.

 In essence, this could result in a flood of selling and lower stock price.

2) Change in Board of Directors/Management

A senior executive, such as the CFO or MD, might be departing the company soon, the company might reveal on an earnings call. Despite beating expectations for earnings, this could lead to a decline in the stock price.

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We will discuss 3 points in next post