Negative Price Reaction to Follow Citi Earnings?

Citigroup (C) is expected to report earnings on Thursday, October 15th. The whisper number is $1.30, two cents ahead of the analysts’ estimate and showing some confidence from the WhisperNumber community. Whispers range from a low of $1.12 to a high of $1.45. Citigroup has a 53% positive surprise history (having topped the whisper in 29 of the 55 earnings reports for which we have data).

Earnings history:

– Beat whisper: 29 qtrs

– Met whisper: 0 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 timeframe:

C1015A

The strongest price movement of -2.9% comes within thirty trading days when the company reports earnings that beat the whisper number, and -3.6% within thirty trading days when the company reports earnings that miss the whisper number. 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:

C1015B

The company has reported earnings ahead of the whisper number in three of the past four quarters with a whisper number. In the comparable quarter last year the company reported earnings three cents ahead of the whisper number. Following that report the stock realized a 1.2% loss in five trading days. Last quarter the company reported earnings ten cents ahead of the whisper number. Following that report the stock realized a 4.2% gain in five trading days before turning and seeing a 7.6% loss in thirty trading days. Overall historical data indicates the company to be (on average) a ‘negative’ price reactor when the company reports earnings.

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

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