DEFINITION of 'Institutional Brokers' Estimate System - IBES'

Institutional Brokers' Estimate System (IBES) is a database that gathers and compiles the different estimates made by stock analysts on the future earnings for the majority of U.S. publicly traded companies.

BREAKING DOWN 'Institutional Brokers' Estimate System - IBES'

The IBES is a central location whereby investors are able to research the different analyst estimates for any given stock without necessarily searching for each individual analyst.

The IBES database is maintained by Thomson Reuters and was first compiled in 1976. The system draws upon analyst estimates for more than 230 different types of measures for companies across multiple industries. These measures include, but are not limited to, revenue, earnings per share, price targets, net debt, enterprise value, and net income.

The database can present summaries as well as more detailed estimates gathered from analysts and brokers from major international brokerages as well as local, individual analysts.

Why IBES is Relevant to Investment Decisions

Estimates for an ever-growing number of companies are covered by IBES. The database includes recommendations from the analysts on whether to buy, hold, or sell shares in a public company. The database contains estimates data on annual periods, fiscal quarters, and other timeframes where a company’s performance can be measured and anticipated. The intent of IBES is to provide a concise centralized system for users of the database to access as a tool to make decisions and predictions about a security. The collection of data allows for a broader consensus estimate rather than a narrow judgement drawn from a small set of opinions on a given stock.

IBES can be used a variety of ways to research investment opportunities. Forecast models for earnings per share results, for instance, may be created using IBES as a benchmark.  The database might be used in accounting research. There are also distinct databases based on IBES that are offered by Thomson Reuters. For example, IBES guidance data and earnings estimates are available to academics through the Wharton School of the University of Pennsylvania to review and evaluate the expectations for companies. The IBES history database can be used to compare and test investment theories. Other business schools might also offer their academics access to IBES to help them assess companies’ prospects and actual historical performance.

There are other types of databases that might be used for comparable needs. The Center for Research on Security Prices has developed databases for stock prices—including daily and monthly market information, research and historical data, along with data for academic uses.

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