Abercrombie & Fitch (ANF) is expected to report fiscal fourth quarter earnings on Friday, February 21st. The whisper number is $2.08, 12 cents ahead of the analysts' estimate. ANF has a 61% positive surprise history (having topped the whisper in 22 of the 36 earnings reports for which we have data).
- Beat whisper: 22 qtrs
- Met whisper: 2 qtrs
- Missed whisper: 12 qtrs
Our primary focus is on post earnings price movement. Knowing how likely a stock's price will move following an earnings report can help you determine the best action to take (long or short). In other words, we look at what happens when the company beats or misses the whisper number expectation.
The table below indicates the average post earnings price movement within a one and 30 trading day timeframe:
Although the price movement is positive through 20 trading days, the strongest price movement of -3.2% comes within 30 trading days when the company reports earnings that beat the whisper number, and -5.6% within five trading days when the company reports earnings that miss the whisper number.
The table below indicates the most recent earnings reports and short-term price reaction:
(click to enlarge)
The post earnings price movement within five trading days has been negative in three out of the four most recent quarters (that had a whisper number). It did not matter if the company beat or missed the whisper number. In the comparable quarter last year, the company reported earnings four cents short of the whisper number. Following that report, the stock realized a 3.0% loss in five trading days. We would label the company a negative post earnings price reactor.
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Since 1998, WhisperNumber.com has been tracking and publishing "crowd sourced estimates" for earnings. We call these earnings expectations whisper numbers. Our whisper numbers are gained from individual investors and traders just like you that have registered with our site. While the whisper number itself is an important part of our analysis, a company's "price reaction" to beating or missing the whisper number expectation is the key. On average, companies that exceed the whisper are "rewarded," while companies that miss are "punished" following an earnings report.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.