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 Estimate

    An analyst's estimate for a company's future quarterly or annual ...
  5. Earnings

    The amount of profit that a company produces during a specific ...
  6. Analyst

    A financial professional who has expertise in evaluating investments ...
Related Articles
  1. Professionals

    5 Mental Mistakes That Affect Stock Analysts

    They know more about stocks than the average person, but analysts are still affected by biases. Find out what they are.
  2. Economics

    Earnings Guidance: Can It Accurately Predict The Future?

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

    Everything Investors Need To Know About Earnings

    We go over the concepts behind the excitement over the most important figure in the stock market.
  4. Markets

    Whisper Numbers: Should You Listen?

    These unofficial forecasts hold the potential for insider insight - and investment risk.
  5. Markets

    Surprising Earnings Results

    Consensus estimates can send stocks spiraling - but are they representing reality?
  6. Options & Futures

    Profit From Earnings Surprises With Straddles And Strangles

    These option strategies allow traders to play on earnings announcements without taking a side.
  7. Investing

    Why do companies postpone earnings announcements?

    During the course of a fiscal year, a company will report earnings on a total of four separate occasions: three quarterly statements filed as 10-Qs, and one annual report with Quarter 4 data ...
  8. Investing

    One of my stocks missed the deadline to file its quarterly financial statements. What happens next?

    The date and time that a company releases its earnings is very important because investors looking to buy or sell the particular security are counting on the information to help make a decision. ...
  9. Investing

    Is an earnings surprise priced into the opening value by market makers or does the buyer/seller response ...

    An earnings surprise is an event where the earnings of a company are greater or lower than the predictions put forth by analysts, usually by a relatively large margin. Depending on the earnings ...
  10. Options & Futures

    How do you trade put options on E*TRADE?

    Learn all about put option trading at E*TRADE. Explore margin accounts and become familiar with the different types of option writing.

You May Also Like

Hot Definitions
  1. Treasury Bond - T-Bond

    A marketable, fixed-interest U.S. government debt security with a maturity of more than 10 years. Treasury bonds make interest ...
  2. Weight Of Ice, Snow Or Sleet Insurance

    Financial protection against damage caused to property by winter weather specifically, damage caused if a roof caves in because ...
  3. Weather Insurance

    A type of protection against a financial loss that may be incurred because of rain, snow, storms, wind, fog, undesirable ...
  4. Portfolio Turnover

    A measure of how frequently assets within a fund are bought and sold by the managers. Portfolio turnover is calculated by ...
  5. Commercial Paper

    An unsecured, short-term debt instrument issued by a corporation, typically for the financing of accounts receivable, inventories ...
  6. Federal Funds Rate

    The interest rate at which a depository institution lends funds maintained at the Federal Reserve to another depository institution ...
Trading Center