Glossary
Earnings Estimate
What analysts covering a company expect it to earn in a coming quarter or year, published before the company reports the real figure.
Each analyst covering a company publishes a number for earnings per share, and the average of those numbers is what gets quoted as the consensus estimate. It is a forecast made by people outside the company, revised as new information arrives, and it exists for periods that have not happened yet.
Its main job is to be the line the actual result gets measured against. A report described as a beat came in above the consensus estimate, and a miss came in below it. That is a comparison against a forecast rather than against the business's own history, so a company can beat an estimate in a quarter its revenue fell, and can miss one in a quarter it grew.
Estimates are also revised between reports, and the course's ratings lesson notes that a change in what analysts expect a company to earn tends to move a price more than a change in the rating does. ConvictionStocks reports the estimate, the reported figure, and the gap between them, without adding a forecast of its own.
Learn this properly
Lesson 10: Understanding Analyst RatingsWhat Buy, Hold, and Sell ratings actually mean, how analyst consensus works, and why you should use them carefully.
Related terms
- Earnings ReportA company's quarterly public account of what it earned and spent, filed with regulators and released on a set date.
- EPS (Earnings Per Share)A company's profit divided by the number of shares it has, so profit is expressed per slice of ownership.
- Analyst RatingA professional stock researcher's published opinion on a company, usually summarized as Buy, Hold, or Sell.
- GuidanceA company's own published expectation for its coming quarters, such as a revenue range, issued alongside its results.
Get the free weekly market digest
The week's biggest movers, every Sunday. No spam.