3 Upcoming Earnings Reports With Strong Upside Potential

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WhisperNumber.com submits:

Baker Hughes ( BHI ), Mastercard ( MA ), and Fluor Corp. ( FLR ) are classic whisper reactors with strong upside potential when topping the whisper number expectation.

We've seen a number of big post-earnings price moves in recent weeks. Last month we watched as Blythe Industries ( BTH ) jumped 9.3% in just one trading day following their report, Carmax ( KMX ) moved +8.6% in just two trading days, and Jabil Circuit ( JBL ) saw a 9.7% increase in three trading days. More recent reports include Wells Fargo ( WFC ) moving 6.5% in just eight trading days following their report on October 20th, while Comcast ( CMCSA ) moved a strong 6.9% in just two trading days following their report on October 27th. All had one thing in common - they were able to top their whisper number.

Next week there are fifteen companies reporting earnings that our data indicates should see positive price movement if they beat the whisper number, and negative price movement if they fall short. We'll take an in-depth look at the three companies with the largest expected positive price move.

Baker Hughes ( BHI ) is expected to report earnings on November 1st, before market open. The whisper number is $0.48, two cents above the analysts estimates. Baker Hughes has exceeded the whisper number in only 13 (50%) of the 26 earnings reports we have data, and has fallen short in the past four out of five quarters. Over the past four years, when the company has exceeded the whisper number, the average price reaction is +9% in twenty-five trading days. While the track record of beating the whisper number is only 50/50, and the whisper number is two cents ahead of the analysts estimate (making it that much more difficult to exceed), the expected price reaction is very strong.

Mastercard ( MA ) is expected to report earnings on November 2nd, before market open. The whisper number is $3.46, eight cents below the analysts estimates. Mastercard has exceeded the whisper number in 15 (88%) of the 17 earnings reports we have data. Over the past four years, when the company has exceeded the whisper number, the average price reaction is +10.5% in thirty trading days. The track record of beating the whisper is strong, but the whisper number will be tough to overcome, and the expected price reaction is very strong.

Fluor Corp. ( FLR ) is expected to report earnings on November 4th, after market close. The whisper number is $0.40, nine cents above the analysts estimates. Fluor has exceeded the whisper number in 14 (74%) of the 19 earnings reports on which we have data, including the past nine out of ten quarters. Over the past four years, when the company has exceeded the whisper number, the average price reaction is +8.8% in fifteen trading days. While the expected price reaction is very strong, and the track record of beating the whisper is strong, the whisper number may be difficult to overcome.

These are just three of a very specific set of fifteen companies expected to report earnings next week. These are companies that have 'reacted' to the whisper as we would have expected - companies that see strength when they beat the whisper, and weakness when they miss.

But there is one significant caveat required here - these companies also react with strong negative price movement when they miss the whisper number. In other words look out below if they fall short of the whisper number expectations.

The whisper number is derived from an average of individual investors, floor traders, investment advisors, and market strategists expectations regarding earnings for the most recent quarter. Companies that exceed both the whisper number (from WhisperNumber.com) and the analysts estimate see a 2.5 times greater positive post earnings price move than companies that only exceed the analysts estimate but miss the whisper.

Disclosure: No positions

See also 13 High PEG Stocks That Are Headed Down on seekingalpha.com



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , US Markets


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