Aeropostale Inc. (ARO) is expected to report fiscal fourth quarter earnings on Thursday, March 14th. The whisper number is $0.22, in-line with the analysts' estimate. ARO has a 50% positive surprise history (having topped the whisper in 8 of the 16 earnings reports for which we have data).
- Beat whisper: 8 qtrs
- Met whisper: 1 qtrs
- Missed whisper: 7 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 +9.9% comes within thirty trading days when the company reports earnings that beat the whisper number, and +5.6% within thirty trading days when the company reports earnings that miss the whisper number (positive reactor). The average price reaction shows a consistent positive price reaction through thirty trading days.
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 positive in four out of the four most recent quarters. It did not matter if the company beat, met, or missed the whisper number. In the comparable quarter last year, the company reported earnings six cents ahead of the whisper number. Following that report, the stock realized an 11.1% gain in five trading days. Last quarter the company reported earnings two cents ahead of the whisper number. Following that report, the stock realized a 7.6% loss in after hours trading, but recovered it all back within four trading days. Historical data indicates the company to be a positive 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 who 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.