This week's chart comes from the Morningstar's Equity Market Strategist, Lochlan Halloway. His earnings season wrap compared this February's reporting to previous reporting periods.

The paradox of being an investor is that the only thing that matters is what a company achieves in the future. Yet all the information we have is historic. Many investors place outsized importance on earnings season as it shows how companies, and their investments, performed. Although interesting, it defeats the purpose of investing, as we should not place emphasis on what happened in the past. Our focus should remain on the future. After all, we purchase shares not for their past performance or results, but for their future potential.

At Morningstar, we believe the real opportunities for investors occur when the short-term reaction to an earnings announcement is not in line with the long-term value of a company. Changes to our fair value estimates for a company can provide context to price movements.

Lochlan expands on the results by saying that they are pretty typical comparative to other years. He says, 'What stands out is how ‘normal’ February looks, despite all the media noise and some wild swings in the market. We upgraded about a third of companies we cover – very close to the historical proportion – and a median upgrade of 4% is bang in line with recent years. At roughly 15%, downgrades accounted for a typical share of total results, and a median of 7% is about average. Drilling down to individual stocks, we made some material changes at both ends of the spectrum, but overall, things appear pretty typical.'

Lochlan's Outlook is available to Morningstar Investor subscribers and trialists, and drills into the material changes that Morningstar's equity analysts made during earnings season.

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