Consensus Estimate

What is a 'Consensus Estimate'

A consensus estimate is a figure based on the combined estimates of the analysts covering a public company. Generally, analysts give a consensus for a company's earnings per share and revenue; these figures are most often made for the quarter, fiscal year and next fiscal year. The size of the company and the number of analysts covering it will dictate the size of the pool from which the estimate is derived.

BREAKING DOWN 'Consensus Estimate'

When you hear that a company has "missed estimates" or "beaten estimates", these are references to consensus estimates. Based on projections, models, sentiments and research, analysts strive to come up with an estimate of what the company will do in the future.

Obviously, consensus estimates are not an exact science. This leads some market pundits to believe that the market is not as efficient as often purported, and that the efficiency is driven by estimates about a multitude of future events that may not be accurate. This might help to explain why a company's stock quickly adjusts to the new information provided by quarterly earnings and revenue numbers when these figures diverge from the consensus estimate.

RELATED TERMS
  1. Earnings Estimate

    An analyst's estimate for a company's future quarterly or annual ...
  2. First Call

    A company that gathers research notes and earnings estimates ...
  3. Estimated Current Return

    The estimated return for a unit investment trust over the short ...
  4. Guidance

    Information that a company provides as an indication or estimate ...
  5. Rolling EPS

    A measure of a company's earnings per share based on the previous ...
  6. Forward Price To Earnings - Forward ...

    A measure of the price-to-earnings ratio (P/E) using forecasted ...
Related Articles
  1. Investing

    Strategies For Quarterly Earnings Season

    Breeze through consensus estimates like the biggest Wall Street forecasters.
  2. Economics

    Earnings Forecasts: A Primer

    Learn how this key metric is calculated and how it is used to judge market performance.
  3. Markets

    The Impact Of Sell-Side Research

    Sell-side analysts are not stock buyers or sellers - rather, they provide unbiased guidance to traders.
  4. Stock Analysis

    Wal-Mart Stock: An Earnings Case Study (WMT)

    Examine Wal-Mart's earnings history and outlook. Analyze financial data to determine which factors are driving performance and influencing analyst estimates.
  5. Stock Analysis

    Microsoft Stock: An Earnings Case Study (MSFT)

    Examine Microsoft's historic and forecast earnings. Analyze the factors driving recent EPS performance and shaping consensus analyst estimates.
  6. Stock Analysis

    Nike Stock: An Earnings Case Study (NKE)

    Analyze Nike's historical earnings to determine which factors are driving profit. Assess income performance and consensus analyst outlook for Nike.
  7. Stock Analysis

    Boeing Stock: An Earnings Case Study (BA)

    Check out the earnings analysis for Boeing, including the company's historical earnings and analysts' past and future earnings estimates.
  8. Markets

    Valuing Private Companies

    You may be familiar with publicly-traded companies, but how much do you know about privately-held firms?
  9. Personal Finance

    A Day in the Life of an Equity Research Analyst

    What does an equity research analyst do on an everyday basis?
  10. Insurance

    Everything Investors Need To Know About Earnings

    We go over the concepts behind the excitement over the most important figure in the stock market.
RELATED FAQS
  1. What happens if a company's earnings fall short of estimates?

    Understand what it means when a company "misses earnings" and does not live up to consensus estimates, and learn why most ... Read Answer >>
  2. What is the first day of the first quarter?

    The first day of companies' fiscal years varies based on industry cycles. The timing is especially important because annual ... Read Answer >>
  3. When does Q4 start and finish?

    Learn about different financial years used by various companies. Explore when the fourth quarter begins on October 1st and ... Read Answer >>
  4. What is a quarterly report?

    Learn about quarterly reports and why they are important to investors. Explore street consensus estimates and how reported ... Read Answer >>
  5. When does a business report gross margins?

    Learn how gross margins are calculated and when publicly traded companies release these figures. Explore consensus street ... Read Answer >>
  6. How do companies calculate the estimated duration of a new project?

    Learn about some of the common methods used by companies to estimate the duration of a new project, including those with ... Read Answer >>
Hot Definitions
  1. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  2. Keynesian Economics

    An economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed ...
  3. Society for Worldwide Interbank Financial Telecommunications ...

    A member-owned cooperative that provides safe and secure financial transactions for its members. Established in 1973, the ...
  4. Generally Accepted Accounting Principles - GAAP

    The common set of accounting principles, standards and procedures that companies use to compile their financial statements. ...
  5. DuPont Analysis

    A method of performance measurement that was started by the DuPont Corporation in the 1920s. With this method, assets are ...
  6. Call Option

    An agreement that gives an investor the right (but not the obligation) to buy a stock, bond, commodity, or other instrument ...
Trading Center