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Definition of 'Earnings Estimate'
An analyst's estimate for a company's future quarterly or annual earnings. Future earnings estimates are arguably the most important input when attempting to value a firm. By placing estimates on the earnings of a firm for certain periods (quarterly, annually, etc), analysts can then use cashflow analysis to approximate a fair value for a company, which in turn will give a target share price for publicly traded companies.
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Investopedia explains 'Earnings Estimate'
Analysts use forecasting models, management guidance and fundamental information on the company in order to derive an estimate. Market participants rely heavily on earnings estimates to gauge a company's performance when announcing quarterly or annual results. The analysts' earnings estimates are used as a benchmark to measure a firm's performance relative to how experts expected it would do.
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Breeze through consensus estimates like the biggest Wall Street forecasters.
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Explore the controversies surrounding companies commenting on their forward-looking expectations.
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EPS helps investors analyze earnings in relation to changes in new-share capital.
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