A battle of the big oils will take place in the next few trading days. Both Chevron (CVX) and Exxon (XOM) report earnings and, if the past is any indication, there will be strong attention paid to these reports. We'll take a look at post earnings price movement of each company and which one (if either) presents a better earnings trade.
Chevron (CVX) reports fiscal fourth quarter earnings on Friday, January 28th, before market open. The whisper number is $2.46, six cents ahead of the analysts estimates. Chevron has historically given investors a negative surprise (by narrow margin) as they have fallen short of investor expectations in nine quarters, met in one, and beat in eight.
Since Chevron 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 +0.2%. The average price move in five trading days following their earnings report is -0.3%.
Longer term earnings analysis (last four years of earnings) shows the company tends to see (on average) negative price movement of -0.5% (intra-day) in one trading day following their earnings report, and -0.9% in five trading days.
Chevron does not meet the criteria of a 'consistent' reactor to beating or missing the whisper number per WhisperNumber.com, but it comes very close. It has a 69% accuracy rating through ten trading days (the minimum accuracy rating is 70% over the past four years of earnings reports). The average price move when beating the whisper number is +2.7% in ten trading days following earnings, and -2.9% when missing the whisper number.
The majority of investors polled are expecting the company to provide a positive outlook:
- Positive 81.8%
- Neutral 18.2%
- Negative 0.0%
Since Chevron's last earnings report at the end of October the stock is up 14%.
Exxon (XOM) reports fiscal fourth quarter earnings on Monday, January 31st, before market open. The whisper number is $1.60, three cents ahead of the analysts estimates. Exxon has historically given investors a positive surprise (by narrow margin) as they have topped investor expectations in eighteen quarters, and missed in sixteen.
Like Chevron, Exxon also reports earnings before market open, so 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 -0.6%. The average price move in five trading days following their earnings report is +0.4%.
Longer term earnings analysis (last four years of earnings) shows the company tends to see (on average) negative price movement of -0.5% (intra-day) in one trading day following their earnings report, and -1.1% in five trading days.
Unlike Chevron, Exxon does meet the criteria of a 'consistent' reactor to beating or missing the whisper number per WhisperNumber.com. It has a 71% accuracy rating through five trading days. The average price move when beating the whisper number is +1.5% in five trading days following earnings, and -2.7% when missing the whisper number.
The majority of investors polled are expecting the company to provide a positive outlook:
- Positive 75.0%
- Neutral 25.0%
- Negative 0.0%
Since Exxon's last earnings report at the end of October the stock is up 19%.
When analyzing the data we collect, the most important aspects are how a company reacts to beating or missing the whisper number, the average post earnings price movement, and in what timeframe. Keep in mind that trading on whispers is a technical play on market psychology, rather than a bet on a company's fundamental strengths.
With that in mind, Chevron and Exxon present very similar price reaction scenarios. Both whisper number's show similar investor confidence. Both companies have seen similar post earnings price movement over the past four quarters. Both companies have seen similar post earnings price movement over the past four years. And both companies are expected to provide a positive outlook for next quarter. But the difference that stands out is that Exxon meets the criteria of a 'Whisper Reactor' - it has a higher accuracy rating indicating a more consistent price reaction.
By only a slight margin, data indicates Exxon a better short term earnings trade.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
