J.C. Penney (NYSE:JCP) is expected to report fiscal fourth quarter earnings on Wednesday, February 27th. The whisper number is -$0.19, one cent behind the analysts' estimate. JCP has a 79% positive surprise history (having topped the whisper in 26 of the 33 earnings reports for which we have data).
- Beat whisper: 26 qtrs
- Met whisper: 1 qtrs
- Missed whisper: 6 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:
The strongest price movement of -1.6% comes within five trading days when the company reports earnings that beat the whisper number, and -12.3% within thirty trading days when the company reports earnings that miss the whisper number (negative reactor). The average price reaction is inconsistent through thirty trading days no matter what the company reports.
The table below indicates the most recent earnings reports and short-term price reaction:
The post earnings price movement within five trading days has been negative in four out of the five 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 two cents ahead of the whisper number. Following that report, the stock realized a 5.2% loss in five trading days. Last quarter the company reported earnings eighty-seven cents short of the whisper number. Following that report, the stock realized a 15.6% loss in five trading days. Historical data indicates the company to be 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. 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.