MasterCard (NYSE:MA) is expected to report earnings on Thursday, July 31st. The whisper number is $0.83, six cents ahead of the analysts' estimate and showing strong confidence from investors. Whispers range from a low of $0.79 to a high of $0.90. MasterCard has an 88% positive surprise history (having topped the whisper in 28 of the 32 earnings reports for which we have data).
- Beat whisper: 28 qtrs
- Met whisper: 0 qtrs
- Missed whisper: 4 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 analyze 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 +4.2% comes within thirty trading days when the company reports that beat the whisper number, and +2.8% within thirty trading days when the company reports earnings that miss the whisper number. Although the strongest price moves are positive, the overall average price move is 'as expected' (beat the whisper number and see strength, miss and see weakness) when the company reports earnings.
The table below indicates the most recent earnings reports and short-term price reaction:
The company has reported earnings ahead of the whisper number in two of the past four quarters with a whisper number. In the comparable quarter last year, the company reported earnings seventy-one cents ahead of the whisper number. Following that report, the stock realized a 2.9% gain in five trading days. Last quarter, the company reported earnings four cents short of the whisper number. Following that report, the stock realized a 2.3% loss in five trading days. Overall historical data indicates the company to be (on average within thirty trading days) an 'as expected' price reactor when the company reports earnings.
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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. Trading on whispers is a technical play on market psychology, rather than a bet on a company's fundamental strengths. To start receiving trade alerts click here.
Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it. The author has no business relationship with any company whose stock is mentioned in this article.