NEW YORK ( TheStreet) -- MasterCard (MA) reports this week, but enough about that. In the lead-up to their earnings -- really, any earnings -- it's essential to take inventory of Wall Street sentiment, something the media rarely does. I know, I know: the media is dutiful in telling us the numbers; precisely where Wall Street earnings estimates stand. Sometimes it's all they do.
But I'm talking ratings: how many Wall Street firms are rating the stock a so-called Buy -- and how many a Sell? In the near term, a shift in rating can push a stock. But f everyone is already rating the stock a Buy, it may have no impetus to run. Similarly, if a high number have the stock rated a Hold or lower, there is a bit more potential. This is not a foolproof measure or, by any means, the only factor a trader should be examining in the prelude to an earnings report. But it is one and it is a little troubling that the media pays it little, if any, mind.
Motley Fool was typical, running a story called "How High Will MasterCard Fly?" without looking at the proportion of buy ratings. Fox told us that MasterCard and fellow credit-card company Visa (V) were going to report, as well as Pfizer (PFE), CBS (CBS), Cablevision (CVC) and Time Warner (TWX) but they didn't give us one-thin clue about the ratings breakdown going into the report.Break it down. Forbes, to its credit, did: "In fact," they wrote, "the brokerage community has doled out a whopping 25 Buy ratings, compared to 10 Holds, and no Sells." On this issue, central to our understanding of how stocks might react in the hours and days after issuing earnings, Forbes clearly shows the way.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV