Earnings Surprise

AAA

DEFINITION of 'Earnings Surprise'

Occurs when a company's reported quarterly or annual profits are above or below analysts' expectations. These analysts, who work for a variety of financial firms and reporting agencies, base their expectations on a variety of sources - previous quarterly or annual reports, current market conditions, as well as the company's own earnings' predictions or "guidance."

INVESTOPEDIA EXPLAINS 'Earnings Surprise'

Earnings surprises can have a huge impact on a company's stock price. Several studies suggest that positive earnings surprises not only lead to an immediate hike in a stock's price, but also to a gradual increase over time. Hence, it's not surprising that some companies are known for routinely beating earning projections. A negative earnings surprise will usually result in a decline in share price.

RELATED TERMS
  1. Triple Play

    In investments, a stock that simultaneously beats analyst expectations ...
  2. Earnings Announcement

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

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

    The amount of profit that a company produces during a specific ...
  5. Earnings Estimate

    An analyst's estimate for a company's future quarterly or annual ...
  6. Analyst

    A financial professional who has expertise in evaluating investments ...
Related Articles
  1. 5 Mental Mistakes That Affect Stock ...
    Professionals

    5 Mental Mistakes That Affect Stock ...

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

    Earnings Guidance: Can It Accurately ...

  3. Everything Investors Need To Know About ...
    Insurance

    Everything Investors Need To Know About ...

  4. Whisper Numbers: Should You Listen?
    Markets

    Whisper Numbers: Should You Listen?

Hot Definitions
  1. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option ...
  2. Leading Indicator

    A measurable economic factor that changes before the economy starts to follow a particular pattern or trend. Leading indicators ...
  3. Wage-Price Spiral

    A macroeconomic theory to explain the cause-and-effect relationship between rising wages and rising prices, or inflation. ...
  4. Accelerated Depreciation

    Any method of depreciation used for accounting or income tax purposes that allows greater deductions in the earlier years ...
  5. Call Risk

    The risk, faced by a holder of a callable bond, that a bond issuer will take advantage of the callable bond feature and redeem ...
  6. Parity Price

    When the price of an asset is directly linked to another price. Examples of parity price are: 1. Convertibles - the price ...
Trading Center