Earnings Estimate


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.

BREAKING DOWN '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.

  1. Earnings Per Share - EPS

    The portion of a company's profit allocated to each outstanding ...
  2. Forward Looking

    A business slang term for predictions about future business conditions. ...
  3. Earnings Announcement

    An official public statement of a company's profitability for ...
  4. Analyst Expectation

    A report issued by an individual analyst, investment bank or ...
  5. Earnings Surprise

    Occurs when a company's reported quarterly or annual profits ...
  6. Earnings

    The amount of profit that a company produces during a specific ...
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  1. What can I learn about a company by studying its earnings report?

    Fundamental analysts often pore over quarterly earnings reports when the reports arrive, hoping to gain an inside track on ... Read Full Answer >>
  2. One of my stocks missed the deadline to file its quarterly financial statements. ...

    The date and time that a company releases its earnings is very important because investors looking to buy or sell the particular ... Read Full Answer >>
  3. How can working capital affect a company's finances?

    Working capital, or total current assets minus total current liabilities, can affect a company's longer-term investment effectiveness ... Read Full Answer >>
  4. What are working capital costs?

    Working capital costs (WCC) refer to the costs of maintaining daily operations at an organization. These costs take into ... Read Full Answer >>
  5. How do I read and analyze an income statement?

    The income statement, also known as the profit and loss (P&L) statement, is the financial statement that depicts the ... Read Full Answer >>
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    Dividends paid in cash affect a company's balance sheet by decreasing the company's cash account on the asset side and decreasing ... Read Full Answer >>

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