Trading Texas Instruments Around Earnings

Texas Instruments (TXN) is expected to report earnings today after market close. The whisper number is $1.25, one cent ahead of the analysts' estimates and showing some confidence from the WhisperNumber community. Whispers range from a low of $1.23 to a high of $1.26.

A year ago the company reported earnings of $1.09, six cents short of the whisper number. Texas Instruments has a 65% positive surprise history (having topped the whisper in 36 of the 55 earnings reports for which we have data).

Earnings history:

  •  Beat whisper: 36 qtrs
  •  Met whisper: 1 qtrs
  •  Missed whisper: 18 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 analyze 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:

The strongest price movement of +6.8% comes within thirty trading days when the company reports earnings that beat the whisper number, and +2.1% within twenty trading days when the company reports earnings that miss the whisper number. Although the strongest price moves are positive, the overall average post earnings price move is 'as expected' (beat the whisper number and see strength, miss and see weakness) when the company reports earnings.

The table below indicates the most recent earnings reports and short-term price reaction:

The company has reported earnings ahead of the whisper number in three of the past four quarters with a whisper number. In the comparable quarter last year the company reported earnings six cents short of the whisper number. Following that report the stock realized a 1.3% loss in one trading days. Last quarter the company reported earnings two cents ahead of the whisper number. Following that report the stock realized a 4.4% gain in thirty trading days. Overall historical data indicates the company to be (on average within thirty trading days) an 'as expected' price reactor when the company reports earnings.

Enter your expectations, view our free earnings calendar, and check out post earnings price moves here

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not ...

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