Alcoa (AA) is expected to report earnings on Thursday, October 8th. The whisper number is $0.14, in-line with the analysts’ estimate and showing neutral confidence from the WhisperNumber community. Whispers range from a low of $0.12 to a high of $0.18. Alcoa has a 39% positive surprise history (having topped the whisper in 24 of the 61 earnings reports for which we have data).
– Beat whisper: 24 qtrs
– Met whisper: 4 qtrs
– Missed whisper: 33 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:
The strongest price movement of +4.8% comes within twenty trading days when the company reports earnings that beat the whisper number, and -4.1% within thirty trading days when the company reports earnings that miss the whisper number. The overall average post earnings price move 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:
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 two cents ahead of the whisper number. Following that report the stock realized a 12.6% loss in five trading days. Last quarter the company reported earnings five cents short of the whisper number. Following that report the stock realized an 18.7% loss in thirty trading days. Overall historical data indicates the company to be (on average) an ‘as expected’ price reactor when the company reports earnings.
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[Image Courtesy of USA Today]