Best Buy (NYSE:BBY) is expected to report earnings on Friday, March 1st. The whisper number is $1.54, one cent ahead of the analysts' estimate. BBY has a 60% positive surprise history (having topped the whisper in 26 of the 43 earnings reports for which we have data).
- Beat whisper: 26 qtrs
- Met whisper: 0 qtrs
- Missed whisper: 17 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 +4.8% comes within thirty trading days when the company reports earnings that beat the whisper number, and -9.3% within thirty trading days when the company reports earnings that miss the whisper number (classic reactor).
The table below indicates the most recent earnings reports and short-term price reaction:
The post earnings price movement within one trading day has been negative in seven out of the eight most recent quarters (that had a whisper number). In the comparable quarter last year, the company reported earnings thirty-eight cents ahead of the whisper number. Following that report, the stock realized a 9.5% loss in five trading days. Last quarter the company reported earnings ten cents short of the whisper number. Following that report, the stock realized a 6.7% loss in one trading day. While the recent data indicates the company to be a negative earnings reactor, historical data suggests the company tends to see strength when they report earnings that top the whisper number, and weakness when they miss through thirty trading days.
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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.