Whisper Number Impact: Earnings Preview For Conagra Foods, General Mills
March 21, 2012 | includes: CAG, GIS
General Mills (GIS
) - The company reported earnings of $0.55, one cent short of the whisper number. Average post earnings price movement when falling short of the whisper number is limited through 30 tradings. As expected, GIS is down less than a half percent in today's trading. Post earnings price movement information can be found here.
When analyzing the data collected by WhisperNumber.com, the most important aspects are how a company reacts to beating or missing the whisper number, the average post earnings price movement, and in what time frame (see link in profile to receive alerts). Since 1998, WhisperNumber.com has been tracking and publishing "crowd sourced estimates" for earnings. Keep in mind that trading on whispers is a technical play on market psychology, rather than a bet on a company's fundamental strengths.
A company's "reaction" to the whisper number expectation is the key - on average companies that exceed the whisper are "rewarded," while companies that miss are "punished" following an earnings report.
According to the Wall Street Journal, "the percentage of companies that have beaten expectations often is cited as a barometer of corporate profitability, an indicator of how well the economy as a whole is doing or a predictor of where the stock market is going. What goes unsaid, however, is that these positive surprises are becoming so common they are nearly universal. They are predetermined in a cynical tango-clinch between companies and the analysts who cover them. And there is no reliable evidence that the stock market as a whole will earn higher returns after periods with more positive surprises."
"'In short, there isn't anything surprising about earnings surprises. They aren't the exception; they are the rule. "All the numbers are gamed at this point,' says James A. Bianco, president of Bianco Research."
Whisper numbers provide the unbiased earnings expectation proven more significant than the analysts estimates.
All trading involves risk and the information presented is not intended to be a recommendation of any kind. http://seekingalpha.com/article/449681-whisper-number-impact-earnings-preview-for-conagra-foods-general-mills?source=yahoo