Boeing (BA) reports fiscal fourth quarter earnings on Wednesday January 26th, before market open. The whisper number is $1.06, six cents short of the analysts estimates. Boeing has exceeded the whisper number in 22 of the 40 earnings reports we have data.
Over the past four quarters, Boeing has seen significant price movement (up and down) following their earnings reports. We'll take a look at when those moves occur (after market or intra-day) and if Boeing presents an earnings trade opportunity.
Since Boeing reports earnings before market open, the key price movement occurs during that same day during intra day trading. Over the past four quarters the average price move for that report day following their earnings release is +2.6%. The average price move in five trading days following their earnings report is +2.8%.
Longer term earnings analysis (last four years of earnings) shows the company tends to see (on average) positive price movement of +0.4% (intra-day) in one trading day following their earnings report, and +0.8% in five trading days.
While Boeing does not meet the criteria of a 'consistent' reactor to beating or missing the whisper number per WhisperNumber.com, it does present some consistency using short term analysis. Over the past year, Boeing does have a 75% accuracy rating as they have seen a price reaction as expected in 3 of the last 4 quarters over a five day post earnings period. But longer term that accuracy drops as Boeing only has a 62.5% accuracy rating (reacting as expected in only 10 of the last 16 quarters). This simply means that the stock does not consistently see strength when they top the whisper, or see weakness when they miss.
Other factors that may influence post earnings price movement;
The majority of investors polled are expecting the company to provide a neutral outlook:
- Positive 38.5%
- Neutral 46.1%
- Negative 15.4%
Boeing earnings have historically given investors a positive surprise (by narrow margin) as they have exceeded investor expectations more times than missed:
- Beat whisper: 22 qtrs
- Met whisper: 1 qtrs
- Missed whisper: 17 qtrs
Data for Boeing presents a glass three quarters empty versus a quarter full scenario. Let's start with the whisper number - it's not showing any confidence this quarter as it is six cents below the analysts estimates. But over the past four quarters the company has averaged short term positive price movement following each report. When looking at a much larger universe of earnings reports (past four years), that positive price move decreases to about a half percent, and their reaction consistency drops as well. And then there is no confidence from investors for their next quarter's outlook. The negatives certainly outweigh the positives and data indicates Boeing does not present a viable short term trading opportunity.
_________________________________________________________
A company's 'reaction' to 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.
Companies that exceed both the whisper number (from WhisperNumber.com) and the analysts estimate see a 2.5 times greater positive post earnings price move than companies that only exceed the analysts estimate but miss the whisper.
The whisper number is derived from an average of individual investors, floor traders, investment advisors, and market strategists expectations regarding earnings for the most recent quarter.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
