Consensus Estimate

AAA

DEFINITION of 'Consensus Estimate'

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.

INVESTOPEDIA EXPLAINS '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 Per Share - EPS

    The portion of a company's profit allocated to each outstanding ...
  2. Delphi Method

    A forecasting method based on the results of questionnaires sent ...
  3. Revenue

    The amount of money that a company actually receives during a ...
  4. Earnings Recast

    The act of amending and re-releasing a previously released earnings ...
  5. Earnings Momentum

    When corporate earnings per share (EPS) growth is accelerating ...
  6. Annual Premium Equivalent - APE

    A common sales measure technique used by insurance companies ...
Related Articles
  1. Can Good News Be A Signal To Sell?
    Fundamental Analysis

    Can Good News Be A Signal To Sell?

  2. The Impact Of Sell-Side Research
    Markets

    The Impact Of Sell-Side Research

  3. The 5 Types Of Earnings Per Share
    Markets

    The 5 Types Of Earnings Per Share

  4. Earnings Guidance: Can It Accurately ...
    Economics

    Earnings Guidance: Can It Accurately ...

comments powered by Disqus
Hot Definitions
  1. Halloween Massacre

    Canada's decision to tax all income trusts domiciled in Canada. In October 2006, Canada's minister of finance, Jim Flaherty, ...
  2. Zombies

    Companies that continue to operate even though they are insolvent or near bankruptcy. Zombies often become casualties to ...
  3. Witching Hour

    The last hour of stock trading between 3pm (when the bond market closes) and 4pm EST. Witching hour is typically controlled ...
  4. October Effect

    The theory that stocks tend to decline during the month of October. The October effect is considered mainly to be a psychological ...
  5. Repurchase Agreement - Repo

    A form of short-term borrowing for dealers in government securities.
  6. Correlation

    In the world of finance, a statistical measure of how two securities move in relation to each other. Correlations are used ...
Trading Center