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).
– 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.