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With the estimates in hand, the market's attention then turns to the company's actual earnings. Companies must by law file their earnings with the Securities and Exchange Commission (SEC), which is the federal arm regulating securities, including stocks. The earnings are filed using special forms known as the 10-Q, which is the form for filing quarterly earnings, and the 10-K, which is the annual earnings forms. These forms contain actual financial data provided by the companies and are open for public's inspection upon release. Companies also file other forms with the SEC concerning their financial status. Keeping with modern times, the SEC maintains an electronic database known as EDGAR (Electronic Data Gathering, Analysis, and Retrieval system) which allows companies to electronically file their forms. All filed forms are then catalogued and are accessible to the public using various electronic methods, chiefly the Web.

Many companies also publish their fiscal year earnings in a book or booklet form known as the Annual Report, which is made available to the shareholders. The Annual Report also contains material financial information about the company for the corresponding year but may also contain other pieces of information that may be of interest to the shareholders. To avoid possible unforeseen reactions, companies normally release their earnings after the market close or before the market open. This way investors get a chance to digest the data before the market opens, allowing for a level playing field. Of course the afterhours trading systems are the exception here, where the stock activity may soar after an earnings release.

When the earnings are released, investors and analysts go to work analyzing the newly released numbers. As you might expect, one of the first things investors will do is compare the actual earnings with the estimates, and for many the buck stops there. Companies beating or meeting the average estimates may see their stocks rise, while those with …