Whisper Number: How Will Red Hat Investors React to Earnings?

Red Hat Inc. (NYSE:RHT) is expected to report earnings on Monday, September 23rd. The whisper number is $0.34, one cent ahead of the analysts’ estimate. Whispers range from a low of $0.31 to a high of $0.37. RHT has a 62 percent positive surprise history, having topped the whisper in 26 of the 42 earnings reports for which we have data.

Earnings history:

- Beat whisper: 26 qtrs
– Met whisper: 2 qtrs
– Missed whisper: 14 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 look at 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 thirty trading day timeframe.

RHT913A

The strongest price movement of +1.8 percent comes within ten trading days when the company reports earnings that beat the whisper number, and -6.7 percent within ten trading days when the company reports earnings that miss the whisper number. The overall average price move is ‘as expected’ (beat the whisper number and see strength, miss and see weakness) when the company reports earnings.