Why We Expect Vera Bradley To Drift Higher After Market Open

Vera Bradley (VRA) just posted huge FQ3’14 earnings after the close. Vera Bradley, an American producer of handbags, luggage, and accessories released their quarterly earnings Wednesday after the market closed beating Wall Street expectations on earnings per share and revenues. Despite strong results this quarter, Vera Bradley decreased their outlook for the next financial period due to a challenging retail sales environment. While these earnings numbers crushed the Wall Street consensus how do they compare to Buy Side and Independent analysts’ expectations and what does that mean we can expect from the stock over the next few days?

The following information is derived from data submitted to the Estimize platform by a set of Buy Side and Independent analyst contributors.

Going into the report Wall Street analysts were expecting 34c EPS and $129.38M revenue while the consensus from Estimize was 36c EPS and $130.14M revenue. After the close on Wednesday VRA reported a huge 37c EPS and $130.10M revenue beating both expectations on earnings per share.

The Estimize consensus is more accurate than Wall Street 69.5% of the time because it represents unbiased market expectations. By tapping into a wider distribution of contributors including hedge fund analysts, asset management firm analysts, industry experts, and students Estimize is better able to capture the true market outlook. For VRA’s FQQ3’14 report on Wednesday Estimize was more accurate on both EPS and revenue.

The magnitude of the difference between the Wall Street and Estimize consensus numbers often identifies opportunities to take advantage of expectations that may not have been priced into the market.


The day leading into the report the market may have baked in the decreasing analyst sentiment as evidenced by the Estimize consensus’ downward EPS and revenue consensus revisions. On Wednesday the price of shares fell 3.07% prior to the report.
 
So what can we expect from VRA over the next few days? Based on our quantitative research we have found that if you benchmark against the market on average when a firm beats the Estimize consensus for EPS the stock price tends to drift upward over the next 3 trading days once the market reopens. For more information about strategies quant. funds are using to leverage the Estimize data set to generate alpha and to learn more about our statistical research check out our whitepaper at estimize.com/api .