Disney (NYSE:DIS) reported earnings after the market closed on Wednesday. The company topped Wall Street profit estimates by thirteen cents a share, and beat the expectation from WhisperNumber.com by ten cents. A Disney earnings beat is not a rare event as the company has topped the whisper number in 35 of the 50 earnings reports for which we have data, a 70% positive surprise history.
The company reported that its five major business units all reported higher profit, with the biggest gain at Disney's movie studio. The unit reported a 75% increase in operating income to $409 million. In pre-market trading this morning the stock moved 3.9% higher. The next thirty days may add to that gain but the move looks to be limited.
The following table shows Disney's reported earnings per share over the past eight quarters alongside the whisper number expectation from contributing investors and traders.
Our primary focus is on post earnings price movement. In other words, we look at what happens when the company beats or misses the whisper number expectation. This price movement analysis has been confirmed through our 15 year track record, and by multiple independent academic studies that show whisper numbers provide greater returns when used as an investment vehicle, and have a greater impact on stock movement than analysts consensus estimates.
The company has now reported earnings ahead of the whisper number in six of the past eight quarters. In the comparable quarter last year, the company reported earnings one cent ahead of the whisper number. Following that report, the stock realized a 1.6% loss in one trading day. Last quarter, the company reported earnings in-line with the whisper number. Following that report, the stock realized a 5.4% gain in thirty trading days.
The table below indicates the average post earnings (intra-day) price movement for Disney within a one and thirty trading day timeframe:
The strongest price movement of +1.2% comes within thirty trading days when the company reports earnings that beat the whisper number. The overall average price move through thirty trading days is 'positive' when the company reports earnings ahead of the whisper number. Based on the above data, and th company topping expectations, it's reasonable to believe that the stock will continue to see strength (averaging a limited 1%) over the next thirty trading days from today's open.
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. Trading on whispers is a technical play on market psychology, rather than a bet on a company's fundamental strengths.
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.