Alphabet Inc. (aka Google)(GOOG, GOOGL) is expected to report earnings on Monday, February 1st. The whisper number is $8.27, seventeen cents ahead the analysts’ estimate and showing confidence from the WhisperNumber community. Whispers range from a low of $8.15 to a high of $8.40. Google has a 62% positive surprise history (having topped the whisper in 27 of the 43 earnings reports for which we have data).
– Beat whisper: 28 qtrs
– Met whisper: 0 qtrs
– Missed whisper: 17 qtrs
Just as we got used to ‘low’ whisper number expectations, Google went ahead and reported two consecutive blow-out quarters. We stated in last quarters article that “after last quarters blow out number (38c ahead of the whisper number) and this years price jump, Google may be looking to start re-living those glory days” (referring to non-stop earnings blow-outs). If they can report another quarter of strong earnings we’ll be there.
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 -0.6% comes within five trading days when the company reports earnings that beat the whisper number, and -1.0% within thirty trading days when the company reports earnings that miss the whisper number. The overall average post earnings price move is very limited and ‘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 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 3.5% gain in one trading day. Last quarter the company reported earnings twenty-two cents ahead of the whisper number. Following that report the stock realized a 4.1% loss in one trading day, before turning and seeing a 2.6% gain within twenty 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.
[Image courtesy of DigitalTrends.com]