The Earnings Quarter - Earnings Whispers (2024)

Navigating the Earnings Quarter: Unveiling Market Dynamics One Quarter at a Time

In 1979, legendary rock band The Clash added a surprise track to their "London Calling" album at the last minute. Many argue it's their best song, yet, it steered clear of the expected title that resonated with its repeated phrase, "stand by me". Instead, it was named "Train in Vain", a phrase not even audibly present in the lyrics, sidestepping any confusion with Ben E. King's famous track.

Drawing a parallel to this musical anecdote, we delve into what is commonly known as the earnings cycle. Yet, to sidestep confusion with Richard Bernstein's 'Earnings Expectation Life Cycle', we christen this phenomenon the "Earnings Quarter". This article offers a lens to view the fluctuations in price from the end of one quarter to the earnings announcement of the next.

Publicly traded companies typically unveil their performance results quarterly, modifying the narrative slightly with each reveal. This alteration in the storyline paves the path for either outperformance or underperformance compared to the broader stock market. This cycle commences as companies close their books at the end of every calendar quarter. After a meticulous review by internal accountants and external auditors, the newly collated data is released to the public, acting as a catalyst that shapes the stock's journey.

Analyzing the stock price behavior and earnings releases of companies priced over $5, with an average daily volume exceeding 150,000 throughout the quarter, uncovers intriguing patterns. In the last quarter-century, 53% of stocks experienced a surge post their earnings announcement, averaging a 3.5% gap, while the remaining faced a dip, averaging a 3.8% gap. However, these initial gaps offer little insight into the stock's trajectory as the quarter unfolds.

The real determiner of the post-gap direction is sentiment, particularly the alignment between results and prevailing sentiments. A unanimous expectation of strong results might fuel an initial rise in stock, but sustaining this ascent becomes challenging due to potential sell-offs.

In this context, we spotlight an "outperformance scenario", where stocks more likely shoot up post earnings declarations. A phenomenon termed as Post Earnings Announcement Drift (PEAD), identified by Ray Ball and Philip Brown back in 1968, becomes a focal point here. PEAD manifests in two forms: a short-term drift spanning the initial five days post earnings release, and a longer-term drift that persists until the next earnings announcement interrupts the narrative.

Our Power Rating system serves as a tool to discern when market expectations diverge drastically from company statements, indicating potential overreactions and quick shifts in position. On the other hand, our Earnings Whisper Grade evaluates the prospects of a longer-term drift, giving greater weightage to earnings quality compared to the Power Rating.

This analysis isn't just a tactical play for the market-savvy. Even less seasoned traders can capitalize on the Post-Earnings Announcement Drift, especially when aligning their strategies with strong Earnings Whisper Grades. The key here is to sidestep the immediate volatility post-announcement and to consider holding positions until the commencement of the next quarter's announcements.

However, this isn't just a game of numbers. It acknowledges that companies exceeding earnings expectations are more likely to outdo the market averages. Yet, it's crucial to consider the influence of macroeconomic conditions, industry trends, and market movements during the post-announcement phase.

As the quarter nears its close, a discernible shift occurs, often referred to as the 'Run-up' phase. During this period, analyst checks commence and new reports circulate, igniting a shift in investor sentiment. This phase sees an overlap with the longer-term PEAD, a phenomenon corroborated by Bernard and Thomas in their 1989 paper.

In the ensuing weeks, data accumulates, aiding in the computation of the Earnings Whisper Number, while option prices witness a surge in volatility. Echoing this concept, William Beaver introduced the 'Earnings Announcement Premium' in the Journal of Accounting Research, highlighting the significant price movements surrounding earnings announcements. Interestingly, there seems to be a favorable statistical edge to purchasing stocks about a week before positive earnings releases, with benefits extending to holding through until post-announcement fluctuations stabilize.

As we navigate through the Earnings Season, a time when companies report results almost concurrently, certain stocks mirror the positive performance of their counterparts, further enhancing their potential for outperformance. And despite the inherent unpredictability, these anticipations often prove to be correct, granting an advantage to those who hold positions until the post-announcement calm.

Yet, as this cycle repeats, the narrative morphs once again, molded by evolving sentiments and the intrinsic quality of the earnings, charting a fresh course in the intricate journey of stock market investments.

The Earnings Quarter -  Earnings Whispers (2024)

FAQs

Is earning whisper worth it? ›

Whisper numbers can be useful when they differ (and of course, are more accurate) than the consensus forecast. For example, a lower whisper can provide a signal to get out of a stock you own before earnings come out.

How often is earnings whisper right? ›

Over the past quarter-century, we have published 117,067 Earnings Whisper® numbers, meticulously gathered from 11,579 proficient buy and sell-side analysts. Our precision is unparalleled, with our Earnings Whisper number being the most accurate published expectation an impressive 71.7% of the time.

What is the whisper number for Nvidia earnings? ›

The Earnings Whisper number was $5.80 per share. The company beat expectations by 7.07% while revenue grew 262.12% on a year-over-year basis. The company said it expects second quarter non-GAAP earnings of $5.96 to $6.48 per share on revenue of $27.44 billion to $28.56 billion.

What is the best website to see earnings? ›

The most authoritative and complete resource for all earnings reports is the SEC's EDGAR system.

What is the Earnings Whisper strategy? ›

The Earnings Whisper Score is a tool that helps improve trading odds before earnings announcements. By combining expectations from professional analysts with individual investors, it enables traders to outperform the overall market by measuring the likely Earnings Announcement Premium (EAP).

Is earning whispers free? ›

Whether you're an experienced investor or just starting out, our wealth of knowledge is an invaluable resource. Here's what you can expect when you sign up for a free Earnings Whispers account: Weekly Calendar: Stay updated with a comprehensive schedule of upcoming earnings reports.

What is the prediction on NVDA earnings? ›

Nvidia's Q2 guidance and Wall Street's estimates
MetricQ2 Fiscal 2024 ResultNvidia's Projected Growth
Revenue$13.51 billion107%
Adjusted earnings per share (EPS)$0.27*130%
6 days ago

How often are Nvidia dividends paid? ›

NVIDIA Corporation's ( NVDA ) ex-dividend date is September 12, 2024 , which means that buyers purchasing shares on or after that date will not be eligible to receive the next dividend payment. NVIDIA Corporation ( NVDA ) pays dividends on a quarterly basis. The next dividend payment is planned on October 3, 2024 .

Did Nvidia have good earnings? ›

Nvidia reported fiscal second-quarter earnings and revenue that exceeded analysts' estimates, as data center revenue reached another record high, driven by surging demand for artificial intelligence. The AI chipmaker posted second-quarter revenue of $30.04 billion, more than doubling from the same period a year ago.

What is the earnings whisper score? ›

Our Earnings Whisper Score provides a statistical advantage for trading, either long or short, ahead of a company's earnings release. The Power Rating offers insight into the likely short-term strength or weakness if a stock is bought at the opening following the company's earnings release.

Is Zacks reliable? ›

Is Zacks com trustworthy? Yes, Zacks is trustworthy. The company boasts exceptional long-term returns using its quantitative system which are backed by data.

Can you make money on whisper? ›

With a sizable audience, users can leverage their influence to promote products, services, or brands through sponsored content. This opens up avenues for collaboration with advertisers and marketers, allowing users to monetize their content through sponsored Whisper posts.

How accurate are whisper numbers? ›

The professors looked at reports of whisper numbers on the Internet and found that, on average, First Call's predictions were 6.1cents too low per $1 in earnings, while the whispers were only 4.9 cents too high. Whispers may be more accurate than consensus forecasts, but that doesn't make them a science.

How much is Whisper app worth? ›

Whisper is an anonymous app that has raised $60 million from investors. Its last round valued the startup at about $200 million. At Business Insider's annual IGNITION conference, we asked Whisper CEO Michael Heyward how much of that $60 million he's been able to keep for himself.

What is the Earnings Whisper grade? ›

The Earnings Whisper Grade serves as a tool to discern which stocks are more likely to experience a Post-Earnings Announcement Drift (PEAD).

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