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Finance allah shmoop what is ah whisper number all right

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

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next amazon Trust me anyway be h i is trading

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at one hundred times earnings five times the price to

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earnings multiple of the average growth stock today trading it

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twenty times earnings last year be h i earned a

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dollar a share It has a buck or two a

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share in cash and no debt It has communicated a

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wall street through its quarterly conference calls and meetings with

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

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fifty this year a dollar to a dollar fifty what

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we did there with the word coughing Lee you know

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

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when they say a dollar fifty Why Well because we

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do the math on a few of the key metrics

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

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thousand stores in eastern europe almost double our number in

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

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

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shopping for more Apparently slovenia has had excellent harvest this

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year and then they say people are growing older boulder

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and yeah there really is something about all that wifi

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in carrying cellphones in your pocket all the time yeah

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

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them saying it really we were there All right so

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if you had everything up and put the above data

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

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about their hair growth industry perspective well then your financial

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model would show earnings this year something more like three

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or even four dollars a share not that paltry dollar

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

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they try really hard So you wonder why on earth

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would the cfo of but harry implants guide analysts in

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making them believe the company would only earn a dollar

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fifty when she and everyone around her thinks that more

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likely the number is going to be three or four

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bucks a share in earnings this year Well lawsuits for

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one puns of ambulance chasing scummy lawyers out there claiming

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

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

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then they sue the company for you know stuff and

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

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well enough of not being able to predict the supply

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line of their butt hair well enough Yeah you name

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and the lawyers will see you for it Cos also

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love being heroes and they love beating their estimates toe

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wall street all the time It just makes him you

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know feel good under promise over Deliver that thing All

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

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first quarter showed earnings of sixteen cents a share Your

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went by quarter like this sixteen twenty three one nine

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Thirty There you go So the street is expecting at

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

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growth of one hundred percent over the period a year

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ago But one hundred percent growth from last year would

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give the company earnings of two dollars a share So

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

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paying one hundred dollars a share for this stock If

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they were actually thinking the stock would really print on

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ly two dollars a share in earnings the stock would

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probably not be trading for one hundred boxes share and

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

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actual earnings or at least not fifty times what wall

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street actually thinks the company will print The number of

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the street is whispering It took us a long time

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to get there the whisper number thing but we did

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is forty cents a share in earnings there whispering that

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

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

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about If the company hits forty cents in its first

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

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the year could go something like this you know forty

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fifty sixty seventy and then that would produce to twenty

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years share in earnings and i would be the absolute

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minimum the company would need to keep anything close to

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its huge multiple or stock price It probably needs more

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earnings growth to stay triple digits something like maybe forty

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

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in the three dollars in change number and that would

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

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Like twenty eight times earnings which is not some astronomical

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multiple Got it all right Well the key idea here

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is that the whisper number is the rial number that

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actual investors care about the company hitting not what the

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stockbrokers sell Side analysts published in their earnings estimates that

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they hoped the company would earn thirty two cents Blah

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

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that setting So the key idea here is the number

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that matters is the whisper number whisper number because on

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

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

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whisper number Now go out and buy a bunch of

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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

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