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The Quarter

Stretching from the close of one financial quarter to the earnings announcements of the next, stocks navigate a series of phases influenced heavily by investor sentiment and earnings quality. We explore the intricacies of Post-Earnings Announcement Drift (PEAD) and the tools traders can use to navigate these dynamics, underscoring the importance of aligning strategies with earnings expectations and market sentiment.

Earnings Whisper® Numbers

The whisper number serves as a more accurate barometer of the market's true earnings expectation. For a quarter of a century, the Earnings Whisper® number has held a remarkable track record as the most statistically precise estimate published. Its influence extends beyond precision — it can move prices significantly, particularly when actual results diverge from the consensus estimate.

Earnings Whisper® Grade

The Earnings Whisper Grade provides an insightful analysis of stock performance potential based on earnings expectations. It leverages decades of research dating back to Post-Earnings Announcement Drift (PEAD), discovered in 1968. The Grade interprets market sentiment — a complex mix of professional and individual investor expectations. Historically, A+ graded stocks have notably outperformed the market.

Earnings Whisper® Score

The Earnings Whisper Score 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).

Power Rating

The Power Rating captures significant deviations between earnings results and expectations, identifying conditions that lead to short-term Post-Earnings Announcement Drift. It highlights the extreme dislocations that can occur, signaling potential opportunities for stock price movement during the first few days following an earnings release.

Post-Earnings Announcement Drift

Post-Earnings Announcement Drift (PEAD) is a market anomaly where stock prices gradually drift in the direction of an earnings surprise for weeks following its announcement. Despite efficient-market theories, PEAD still exists today — partly due to factors like the Earnings Whisper, an unofficial but often more accurate earnings estimate that savvy investors can exploit.

Earnings Spikes

Most positive earnings gaps are filled before the company reports again. The ones that hold tend to share three things: a move large enough to matter, volume heavy enough to show conviction, and earnings strong enough to justify both. When price, volume, and the Earnings Whisper Grade agree, the initial spike may be the first chapter rather than the whole story.

Earnings Expectation Life Cycle

The Earnings Expectation Life Cycle describes the evolution and adjustment of market expectations around a company's earnings. It begins when initial forecasts are made, then refines as new information arrives — from macro indicators to company news — growing more precise as the announcement approaches. After the announcement, the cycle restarts, offering insight into market dynamics and potential strategies.

Earnings Estimate Revisions

A notable correlation exists between stock prices and earnings estimate revisions. Changes in analysts' estimates often foreshadow shifts in stock prices, reflecting the market's updated expectations. Tracking the direction of these revisions can be instrumental in investment decisions — and on a macro level, overarching revision trends offer insight into the market's overall health and direction.