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Knowing how likely a stock's price will move following an earnings report will help you make better trades. Many investors believe that beating or missing the whisper number has the greatest impact on stock movement. If the number is exceeded, the stock is rewarded and prices move higher. If the number is missed, the stock is punished and prices move lower.

State Street (NYSE:STT) reports earnings Jan. 18th, before market open. The whisper number is $0.92, two cents behind the analysts estimate. State Street has a 69% positive surprise history (having topped the whisper in 20 of the 29 earnings reports for which we have data). The average price movement (starting at next market open) within ten trading days of these twenty-nine earnings reports is +0.6%. The strongest price movement of +2.5% comes within five trading days when the company reports earnings that beat the whisper number. Last quarter the company reported earnings ten cents ahead of the whisper number. Following that report the stock realized a 13.6% gain in twenty trading days.

Adtran (NASDAQ:ADTN) reports earnings Jan. 18th, before market open. The whisper number is $0.47, one cent ahead of the analysts estimate. Adtran has a 92% positive surprise history (having topped the whisper in 11 of the 12 earnings reports for which we have data). The average price movement (starting at next market open) within ten trading days of these twelve earnings reports is -0.5%. The strongest price movement of +2.5% comes within thirty trading days when the company reports earnings that beat the whisper number.

eBay (NASDAQ:EBAY) reports earnings Jan. 18th, after market close. The whisper number is $0.53, four cents behind the analysts estimate. eBay has a 66% positive surprise history (having topped the whisper in 33 of the 50 earnings reports for which we have data). The average price movement (starting at next market open) within ten trading days of these fifty earnings reports is -1.3%. The strongest price movement of +5.5% comes within thirty trading days when the company reports earnings that beat the whisper number. Last quarter the company reported earnings two cents short of the whisper number. Following that report the stock realized a 7.0% loss in thirty trading days.

PNC Bank (NYSE:PNC) reports earnings Jan. 18th, before market open. The whisper number is $1.34, seven cents short of the analysts estimate. PNC has a 65% positive surprise history (having topped the whisper in 17 of the 26 earnings reports for which we have data). The average price movement (starting at next market open) within ten trading days of these twenty-six earnings reports is -0.6%. The strongest price movement of -4.5% comes within five trading days when the company reports earnings that beat the whisper number.

Fastenal (NASDAQ:FAST) reports earnings Jan. 18th, before market open. The whisper number is $0.31, two cents ahead of the analysts estimate. Fastenal has a 39% positive surprise history (having topped the whisper in 7 of the 18 earnings reports for which we have data). The average price movement (starting at next market open) within ten trading days of these eighteen earnings reports is +1.1%. The strongest price movement of +13.5% comes within thirty trading days when the company reports earnings that miss the whisper number.

Northern Trust Corp. (NASDAQ:NTRS) reports earnings Jan. 18th, before market open. The whisper number is $0.71, three cents ahead of the analysts estimate. NTRS has a 67% positive surprise history (having topped the whisper in 18 of the 27 earnings reports for which we have data). The average price movement (starting at next market open) within ten trading days of these twenty-seven earnings reports is -0.2%. The strongest price movement of -4.9% comes within thirty trading days when the company reports earnings that miss the whisper number.

Charles Schwab (NYSE:SCHW) reports earnings Jan. 18th, before market open. The whisper number is $0.15, two cents ahead of the analysts estimate. Schwab has a 35% positive surprise history (having topped the whisper in 6 of the 17 earnings reports for which we have data). The average price movement (starting at next market open) within ten trading days of these seventeen earnings reports is +0.2%. The strongest price movement of +5.8% comes within thirty trading days when the company reports earnings that beat the whisper number, and -7.2% in thirty days when the company falls short of the whisper number.

Goldman Sachs (NYSE:GS) reports earnings Jan. 18th, before market open. The whisper number is $1.67, forty-three cents ahead of the analysts estimate. Goldman has a 69% positive surprise history (having topped the whisper in 25 of the 36 earnings reports for which we have data). The average price movement (starting at next market open) within ten trading days of these thirty-six earnings reports is +0.8%. The strongest price movement of +2.2% comes within thirty trading days when the company reports earnings that beat the whisper number, and +3.0% in one trading day when the company falls short of the whisper number.

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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 (see link in profile to receive alerts). Keep in mind that trading on whispers is a technical play on market psychology, rather than a bet on a company's fundamental strengths.

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.

According to the Wall Street Journal, "the percentage of companies that have beaten expectations often is cited as a barometer of corporate profitability, an indicator of how well the economy as a whole is doing or a predictor of where the stock market is going. What goes unsaid, however, is that these positive surprises are becoming so common they are nearly universal. They are predetermined in a cynical tango-clinch between companies and the analysts who cover them. And there is no reliable evidence that the stock market as a whole will earn higher returns after periods with more positive surprises."

"In short, there isn't anything surprising about earnings surprises. They aren't the exception; they are the rule. "All the numbers are gamed at this point," says James A. Bianco, president of Bianco Research."

Whisper numbers provide the unbiased earnings expectation proven more significant than the analysts estimates.

Disclaimer: All trading involves risk and the information presented is not intended to be a recommendation of any kind.

Source: The Whisper Number Impact: Earnings Preview For 8 Stocks Reporting January 18th