It is no secret that earnings drive stock prices and that earnings estimates are absolutely crucial in setting a benchmark by which a companys results are measured. When a company reports earnings, investors and analysts instantaneously know whether or not the firm missed, met, or exceeded the published consensus earnings estimate. This is an average of all earnings estimates by individual analysts. However, this does not tell the entire story.


Consensus earnings estimates are not always the most accurate. This is especially true with smaller companies that dont have many analysts covering the stock. There are still plenty of small stocks that dont have any analyst coverage at all. Also, new developments occur as the earnings release approaches that dont always make it into the published analyst estimate. So what to do? Enter the whisper number.


First of all, it would help to define the term. It is basically a gut feeling among individual investors of what the companys earnings will be. It can be quite valuable if it significantly differs from the official consensus estimate. Clearly, whisper numbers play important roles on Wall Street. How many times have you seen a company meet or even exceed estimates, only to see the stock plunge? This is quite commonplace on Wall Street and the whisper number is usually the reason. So whether you like it or not, whisper numbers matter, as investors who have had their stock decimated for no apparent reason can attest.


In the past, the whisper number used to be the unofficial earnings estimate of what the company would really earn among the big boys. This has somewhat changed since Regulation FD came into play. Now, it is more among individual investors, with the main source coming from websites. This is why trusting your website is so important. Knowing and trusting accurate whisper numbers can lead to big profits since for the most part, individual investors and professionals are on a level playing field.


Whisper numbers can be especially useful for short-term traders. It would clearly behoove you to be aware what the whisper number is, as well as the likelihood of the company hitting it. Longer-term investors probably shouldnt be as concerned, but as I already said, you should be aware of anything affecting the price of your stock.