How Will Red Hat Traders React to Earnings?

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Red Hat (RHT) is expected to report earnings on Monday, September 21st. The whisper number is $0.46, two cents ahead of the analysts’ estimate and showing confidence from the WhisperNumber community. Whispers range from a low of $0.40 to a high of $0.50. Red Hat has a 62% positive surprise history (having topped the whisper in 31 of the 50 earnings reports for which we have data).

Earnings history:

– Beat whisper: 31 qtrs
– Met whisper: 3 qtrs
– Missed whisper: 16 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 timeframe:

RHT915A

The strongest price movement of +1.3% comes within five trading day when the company reports that beat the whisper number, and -5.9% within ten trading days when the company reports earnings that miss the whisper number. The overall average post earnings price move through thirty trading days is ‘as expected’ (beat the whisper number and see strength, miss and see weakness) when the company reports earnings.

The table below indicates the most recent earnings reports and short-term price reaction:

RHT915B

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 two cents short of the whisper number. Following that report the stock realized a 4.7% loss in five trading days. Last quarter the company reported earnings two cents ahead of the whisper number. Following that report the stock realized a 3.2% loss in ten trading days. Overall historical data indicates the company to be (on average within thirty trading days) an ‘as expected’ price reactor when the company reports earnings.

WhisperNumber provides detailed earnings analysis and earnings trade alerts. Learn more here.

[Image Courtesy of CNBC]

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Hey, Im Joshua, the founder of CNA Finance. I enjoy following the trends in the market and finding the catalysts that are making the moves. If you want to get in contact with me, leave a comment below or email me at CNAFinanceHelp@gmail.com Please keep in mind that I am not an investment advisor and nor is CNA Finance. This is a news and information gathering outlet. We may work directly with some of the companies that we write about. If we have a business relationship with an issuer, we will mention that in the articles. We also have various affiliate relationships with advertisers and may be paid if you sign up for a service that you were referred to through our website.

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