Consensus Estimate

Filed Under » ,
Dictionary Says

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 Says

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.

Articles Of Interest

  1.

    Earnings Guidance: Can It Accurately Predict The Future?

    Explore the controversies surrounding companies commenting on their forward-looking expectations.

  2. Can Good News Be A Signal To Sell?

    Sometimes positive announcements can mean bad news for a stock. Find out why.

  3. The 5 Types Of Earnings Per Share

    A look at the five varieties of EPS and what each represents can help an investor determine whether a company is a good value, or not.

  4. The Impact Of Sell-Side Research

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

  5. Earnings Forecasts: A Primer

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

  6. Strategies For Quarterly Earnings Season

    Breeze through consensus estimates like the biggest Wall Street forecasters.

  7. Surprising Earnings Results

    Consensus estimates can send stocks spiraling - but are they representing reality?

  8. Listen To The Market, Not Its Pundits

    Tuning in to pundits is fine, but investors should rely on their own research when making important decisions.

  9. What is earnings management?

    Before diving into what earnings management is, it is important to have a solid understanding of what we mean when we refer to earnings. Earnings are the profits of a company. Investors and analysts ...

  10. Mergers And Acquisitions: Understanding Takeovers

    In the dramatic world of M&As, battleground terms meld with bizarre metaphors to form the language of the game.
comments powered by Disqus
Marketplace
Hot Definitions

  1. Yield Elbow

    The point on the yield curve indicating the year in which the economy's highest interest rates occur. The yield elbow is the peak of the yield curve, signifying where the highest interest rates occurred.

  2. Xenocurrency

    A currency that trades in markets outside of its domestic borders.

  3. Wanton Disregard

    A standard of severe negligence. Wanton disregard is a very serious accusation that indicates that a person behaved extremely recklessly.

  4. Ultra ETF

    A class of exchange-traded funds (ETF) that employs leverage in an effort to achieve double the return of a set benchmark.

  5. Toehold Purchase

    A purchase of less than 5% of a target company's outstanding stockmade by an acquiring company. A toehold purchase of just under 5%, while not a significant stake in a firm, allows the shareholders a "toe-holds" grip on the company and its decision making.

  6. Samurai Bond

    A yen-denominated bond issued in Tokyo by a non-Japanese company and subject to Japanese regulations.
Trading Center
http://sp.fastclick.net/ad/tr/10858-64082-15546-0?mpt=e6a3a842a002ae6da967de9bc39e1d62