J.C. Penney (NYSE:JCP) is expected to report earnings on Thursday. The whisper number is -$1.21, 4 cents ahead of the analysts’ estimate and showing some confidence from investors. Whispers range from a low of -$1.25 to a high of -$1.15. J.C. Penney has a 72 percent positive surprise history (having topped the whisper in 28 of the 39 earnings reports for which we have data).
- Beat whisper: 28 qtrs
- Met whisper: 1 qtrs
- Missed whisper: 10 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 30 trading day timeframe:
The strongest price movement of +1.8 percent comes within 30 trading days when the company reports earnings that beat the whisper number and +3.3 percent within 20 trading days when the company reports earnings that miss the whisper number. While the strongest price moves are positive, the overall average price move 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:
The company has reported earnings ahead of the whisper number in one of the past four quarters with a whisper number. In the comparable quarter last year the company reported earnings 49 cents short of the whisper number. Following that report, the stock realized a 5.4 percent gain in five trading days. Last quarter the company reported earnings 15 cents ahead of the whisper number. Following that report, the stock realized a 22.4 percent gain in 30 trading days. Overall historical data indicates the company to be (on average) an “opposite” price reactor when the company reports earnings.
John Scherr is the founder and president of WhisperNumber.com, an independent financial research firm focused on earnings expectations. He is a regular contributor to CNBC and Fox Business Network, and has been featured in Barron’s, The Wall Street Journal, and MarketWatch. He is considered a leading expert on “whisper numbers” and post-earnings price movement analysis. WhisperNumber.com provides specific earnings trade alerts to take advantage of earnings report price movement with its Whisper Reactors subscription service.