Analyst Meeting

Finance allah shmoop what is ah whisper number all right

this is but hair implants it's going to be the

next amazon Trust me anyway be h i is trading

at one hundred times earnings five times the price to

earnings multiple of the average growth stock today trading it

twenty times earnings last year be h i earned a

dollar a share It has a buck or two a

share in cash and no debt It has communicated a

wall street through its quarterly conference calls and meetings with

analysts that it's coughing lee hopes to earn a dollar

fifty this year a dollar to a dollar fifty what

we did there with the word coughing Lee you know

it's not from these cohibas we cough because they cough

when they say a dollar fifty Why Well because we

do the math on a few of the key metrics

they've given us Like they said we're opening another two

thousand stores in eastern europe almost double our number in

the u s today and they say we're supply constrained

just not enough but hair to go around so we're

shopping for more Apparently slovenia has had excellent harvest this

year and then they say people are growing older boulder

and yeah there really is something about all that wifi

in carrying cellphones in your pocket all the time yeah

that's what they say and that was the recording of

them saying it really we were there All right so

if you had everything up and put the above data

and a few other teen nuggets of information you've gleaned

about their hair growth industry perspective well then your financial

model would show earnings this year something more like three

or even four dollars a share not that paltry dollar

fifty that they're telling everyone they hope to make if

they try really hard So you wonder why on earth

would the cfo of but harry implants guide analysts in

making them believe the company would only earn a dollar

fifty when she and everyone around her thinks that more

likely the number is going to be three or four

bucks a share in earnings this year Well lawsuits for

one puns of ambulance chasing scummy lawyers out there claiming

they're acting in the best interest of you know bubba

shareholder they're just waiting for a stock to drop and

then they sue the company for you know stuff and

then there's other things not communicating well enough not marketing

well enough of not being able to predict the supply

line of their butt hair well enough Yeah you name

and the lawyers will see you for it Cos also

love being heroes and they love beating their estimates toe

wall street all the time It just makes him you

know feel good under promise over Deliver that thing All

right So along comes first quarter's earnings and last year's

first quarter showed earnings of sixteen cents a share Your

went by quarter like this sixteen twenty three one nine

Thirty There you go So the street is expecting at

least thirty two cents in earnings this quarter It'd be

growth of one hundred percent over the period a year

ago But one hundred percent growth from last year would

give the company earnings of two dollars a share So

that's not what the street is really thinking when it's

paying one hundred dollars a share for this stock If

they were actually thinking the stock would really print on

ly two dollars a share in earnings the stock would

probably not be trading for one hundred boxes share and

probably more like fifty there's nothing trades at fifty times

actual earnings or at least not fifty times what wall

street actually thinks the company will print The number of

the street is whispering It took us a long time

to get there the whisper number thing but we did

is forty cents a share in earnings there whispering that

the company says they'll dio something less than forty but

they better hit forty cents because that's what everyone's whispering

about If the company hits forty cents in its first

quarter's earning to report while learning through the rest of

the year could go something like this you know forty

fifty sixty seventy and then that would produce to twenty

years share in earnings and i would be the absolute

minimum the company would need to keep anything close to

its huge multiple or stock price It probably needs more

earnings growth to stay triple digits something like maybe forty

sixty eighty eight dollars something like that and then you're

in the three dollars in change number and that would

work a lot better because then you're only treading it

Like twenty eight times earnings which is not some astronomical

multiple Got it all right Well the key idea here

is that the whisper number is the rial number that

actual investors care about the company hitting not what the

stockbrokers sell Side analysts published in their earnings estimates that

they hoped the company would earn thirty two cents Blah

ba blah ba blah Yeah can't trust your stockbroker in

that setting So the key idea here is the number

that matters is the whisper number whisper number because on

wall street you don't always die with a yell sometimes

it's just with a whisper like that so that's a

whisper number Now go out and buy a bunch of

b h i stock and remember i'm not on ly 00:04:50.415 --> [endTime] but harry implants client I'm also the president