Trading Apple Following Earnings Today

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Apple (AAPL) is expected to report earnings on Tuesday, October 27th. The whisper number is $1.95, seven cents ahead of the analysts’ estimate and showing confidence from the WhisperNumber community. Whispers range from a low of $1.85 to a high of $2.05. Apple has a 69% positive surprise history (having topped the whisper in 48 of the 69 earnings reports for which we have data).

Earnings history:

– Beat whisper: 48 qtrs
– Met whisper: 3 qtrs
– Missed whisper: 18 qtrs

The whisper number has been more accurate than analysts estimates in 80% of earnings reported since 1998.

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:

AAPL1015A

The strongest price movement of +3.7% comes within thirty trading days when the company reports earnings that beat the whisper number, and +8.7% within thirty trading days when the company reports earnings that miss the whisper number. While the strongest price moves are positive, the overall average post earnings price move (through ten trading days) is ‘opposite’ (beat the whisper number and see weakness, miss and see strength) when the company reports earnings.

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

AAPL1015B

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 in-line with the whisper number. Following that report the stock realized a 2.2% gain in five trading days. Last quarter the company reported earnings two cents ahead of the whisper number. Following that report the stock realized a 2.6% gain in one trading day before turning and seeing a 10.4% loss in thirty trading days. Overall historical data indicates the company to be an ‘opposite’ price reactor through ten trading days when the company reports earnings, and a ‘positive’ price reactor through ten trading days.

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

[Image courtesy of Benzinga.com]

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