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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  3. How do I read and analyze an income statement?

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