About the Author WhisperNumber

Since 1998, WhisperNumber.com has been the leader in social media analytics ('crowd sourced estimates') for earnings. Receive email alerts on those companies most likely to move higher or lower when they beat or miss the whisper number. These are the Whisper Reactors. http://www.whispernumber.com/suboptions_wr.jsp When earnings season gets underway, traders, analysts and investors are watching closely to see if companies' results squared with Wall Street's expectations. Of particular interest is the "whisper number". A veteran in the business, WhisperNumber.com takes a unique approach: its earnings estimates come from regular polling of its members. The site points to independent academic studies supporting its claims that the crowd is wiser than the Wall Street priesthood (www.whispernumber.com/study.jsp). WhisperNumber.com's free registration buys voluminous information related to the profit histories of companies entering earnings season. Type a ticker into its search engine for an exhaustive earnings profile of a company, alongside a calendar of coming earnings and an education center with whisper strategies for trading. A subscription payment of $395 for six months buys access to the company's premium offering, Whisper Reactors (http://www.whispernumber.com/signIn_wr.jsp), a list of highly volatile companies whose prices show a high correlation to their earnings outcomes. WhisperNumber.com claims a variety of double-digit returns for different types of plays over holding periods of 1-to-30 days. Trading on whispers is a technical play on market psychology, rather than a bet on a company's fundamental strengths. To a technician, share price is just a market-clearing mechanism that strikes a balance between buyer greed and seller fear.

Cisco’s Whisper Number Showing Some Confidence

Cisco (NASDAQ:CSCO) reports earnings after the bell today. The whisper number is $0.52, one cent ahead of the analysts’ estimate and showing some confidence from the WhisperNumber community. Whispers range from a low of $0.49 to a high of $0.55. Cisco has a 55% positive surprise history (having topped the whisper in 34 of the 62 earnings reports for which we have data).

Earnings history:

– Beat whisper: 34 qtrs
– Met whisper: 2 qtrs
– Missed whisper: 26 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 time frame:

The strongest price movement of +1.5% comes within thirty trading days when the company reports that beat the whisper number, and -0.8% within five trading days when the company reports earnings that miss the whisper number. Although the strongest price moves are as expected, the overall average post earnings price move is ‘negative’ (beat the whisper number and see weakness, 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 one cent short of the whisper number. Following that report, the stock realized a 1.9% gain in five trading days. Last quarter, the company reported earnings one cent short of the whisper number. Following that report, the stock realized a 10.4% gain in twenty trading days. Overall historical data indicates the company to be (on average within thirty trading days) a ‘negative’ price reactor when the company reports earnings.

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