Groupon Inc. (NASDAQ:GRPN) is expected to report fiscal fourth quarter earnings on Wednesday, February 27th. The whisper number is $0.00, three cents behind the analysts' estimate. GRPN has a 50% positive surprise history (having topped the whisper in 1 of the 2 earnings reports for which we have data).
- Beat whisper: 1 qtrs
- Met whisper: 0 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.
Because GRPN only recently went public, historical information is (obviously) limited. We'll look at the two reports for which we have data.
The table below indicates the most recent earnings reports and short-term price reaction:
On August 13th, 2012, the company reported earnings two cents ahead of the whisper number. Following that report, the stock realized a 22.9% loss in after hours trading, and added an additional 21.7% loss in just five trading days. Averages indicate strength for most companies that report earnings ahead of the whisper number expectation. GRPN certainly moved against the average outcome.
Last quarter the company reported earnings three cents short of the whisper number. Following that report, the stock realized a 23.5% loss in after hours trading, and added an additional 12.3% loss in just three trading days. Overall GRPN appears to have a short term negative post earnings price reaction.
On a more positive note, the stock (opening at $3.00 following the last earnings report on Nov. 8th) is now trading at a recent high of $5.55 ($5.63 in pre-market today) for an 85% gain in just three months.
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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. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.