Macy's (M) is expected to report fiscal fourth quarter earnings on Tuesday, February 26th. The whisper number is $1.98, one cent behind the analysts' estimate. M has a 75% positive surprise history (having topped the whisper in 6 of the 8 earnings reports for which we have data).
- Beat whisper: 6 qtrs
- Met whisper: 1 qtrs
- Missed whisper: 1 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 thirty trading day timeframe:
The strongest price movement of +1.9% comes within twenty trading days when the company reports earnings that beat the whisper number, and +6.1% within thirty trading days when the company reports earnings that miss the whisper number. However, don't overlook the inconsistent short term price movement when they beat or miss the whisper.
The table below indicates the most recent earnings reports and short-term price reaction:
The company either beat or met the whisper number in the past four quarters. The post earnings price movement within five trading days has been negative in three of the four most recent quarters. In the comparable quarter last year, the company reported earnings four cents ahead of the whisper number. Following that report, the stock realized a 2.5% loss in one trading day. Last quarter the company reported earnings seven cents ahead of the whisper number. Following that report, the stock realized a 5.3% loss in thirty trading days. Based on historical price movement averages the company tends to see inconsistent price movement within twenty trading days, before seeing a consistent positive post earnings price reaction within thirty trading days. We would label the company a positive post earnings price reactor (but patience is required).
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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.