Smith & Wesson Holding Corp. (NASDAQ:SWHC) is expected to report fiscal third quarter earnings on Tuesday, March 5th. The whisper number is $0.26, three cents ahead of the analysts' estimate. Whispers range from a low of $0.16 to a high of $0.30. SWHC has a 75% positive surprise history (having topped the whisper in 3 of the 4 earnings reports for which we have data).
- Beat whisper: 3 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.
The table below indicates the average post earnings price movement within a one and 30 trading day timeframe:
The strongest price movement of -3.2% comes within ten trading days when the company reports earnings that beat the whisper number, and -14.5% within ten trading days when the company reports earnings that miss the whisper number (negative reactor). The average price reaction is inconsistent through thirty trading days when the company reports earnings above expectations.
The company has not seen a great deal of attention from investors over the past few years (no whisper numbers). This is surprising as the stock has seen considerable growth since November 2011 (up 233% since that time). Even though the historical data indicates a negative post earnings price reaction, the data is limited and not based on recent earnings activity and should be weighted accordingly.
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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.