Whisper Number
1. Traditionally, the unofficial and unpublished earnings per share (EPS) forecasts that circulate among professionals on Wall Street. In this context, whisper numbers were generally reserved for the favored (wealthy) clients of a brokerage.
2. A company's forecasted future earnings or revenues according to the collective expectations of individual investors. In this sense, a whisper number would be compiled by a website polling its visitors. Individuals come up with a whisper number using their own analysis of company financials, market trends, gut feel, etc.
Investopedia Commentary
Whisper numbers are especially useful when they differ from the consensus forecast. They can be used as a tool to help spot (or avoid) an earnings surprise (or disappointment). Of course, this is only relevant if they are more accurate than the consensus estimate, and this depends on your source.
With increased regulatory scrutiny placed on the brokerage industry in the start of the century, it's much more difficult (if not impossible) to get a whisper number in the traditional sense. For example, regulations such as Sarbanes-Oxley provide for stricter rules in how companies disclose financial data. Employees, financial professionals and brokerages face significant penalties if they provide insider earnings data to a select group of people. While it's impossible to know the extent that whisper numbers still circulate among the wealthy, it's highly unlikely to be able to get this data as a small investor. For these reasons, the newer definition (expectations of individuals) is of more relevance to regular individual investors.
Related Links
Whisper Numbers: Should You Listen?
Earnings Guidance: The Good, The Bad And Good Riddance?
Can Insiders Help You Make Better Trades?
See also: Earnings, EPS, First Call, Insider Information, Street Expectation, Whisper Stock
Also spelled: whispers
whisper number
Case Study Whisper numbers frequently proved a major factor in moving stock prices during the stock market boom of the late 1990s. A corporate earnings announcement that met consensus estimates by analysts but fell short of the whisper number often resulted in a major price decline in the price of the firm's stock. Likewise, an earnings announcement that exceeded the whisper number could push a stock price higher. Whisper numbers often originated in Internet chat rooms, where individual investors shared rumored information with fellow investors. These rumors were occasionally believed to have corporate insiders as a source. In particular, investors were searching for companies that were likely to report earnings that were higher or lower than expected by Wall Street analysts. Whisper numbers lost their clout following the 2001 implementation of Regulation Fair Disclose, which prohibited companies from making selective disclosures. |