Whisper Number

A whisper number refers to the purported, unofficial and unpublished earnings per share (EPS) forecasts that are believed to circulate among professionals on Wall Street. In this context, whisper numbers were believed to generally reserved for the favored (wealthy) clients of a brokerage.

A whisper number can also refer to 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 analyses of company financials, market trends and gut feelings.

Whisper numbers can be 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. This depends on the sources used to calculate them.

Increased regulatory scrutiny on the brokerage industry made it much more difficult to get a whisper number in the traditional sense. For example, regulations such as Sarbanes-Oxley provided for stricter rules on 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 is impossible to know the extent to whether whisper numbers circulate among the wealthy, it is highly unlikely that a small investor could access that data.

There has been some doubt raised about whether whisper numbers were actually shared by brokers with their high-net-worth clientele. Some brokers have sought to debunk the entire concept as a myth. Whisper numbers based on individual opinions and assessments rather than broker input have come into play with the market as they are marketed by a variety of websites. Their use has sparked some controversy because of the potential influence over the market.

For example, a company might be expected to beat consensus estimates but a whisper number could be set even higher. If the company does beat earnings expectations yet misses the whisper number, its shares could still fall. This may be because investors bought up the stock in advance of the earnings release using the whisper number as their guide. So even though the consensus estimates were surpassed, investors may be disappointed by the results.

It is possible for a whisper number to be a more accurate forecast than consensus estimates when it comes to predicting earnings. This does not necessarily make whisper numbers more valid as predictive options.