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Earnings Estimate

What is an 'Earnings Estimate'

An earnings estimate is 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.

Explaining '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.


Further Reading


The magic in earnings: Economic earnings versus accounting earnings
www.tandfonline.com [PDF]
… Economists sometimes claim that an earnings figure can be based on estimated future cash flows-that it is intended to be some sort of … positive, we must start with a positive earnings figure if we are to multi- ply it by a standard price-earnings ratio to give an estimate of value …

Multiples used to estimate corporate valueMultiples used to estimate corporate value
www.tandfonline.com [PDF]
… Economists sometimes claim that an earnings figure can be based on estimated future cash flows-that it is intended to be some sort of … positive, we must start with a positive earnings figure if we are to multi- ply it by a standard price-earnings ratio to give an estimate of value …

The economic implications of corporate financial reportingThe economic implications of corporate financial reporting
www.sciencedirect.com [PDF]
… Economists sometimes claim that an earnings figure can be based on estimated future cash flows-that it is intended to be some sort of … positive, we must start with a positive earnings figure if we are to multi- ply it by a standard price-earnings ratio to give an estimate of value …

Implications of herding behavior for earnings estimation, risk assessment, and stock returnsImplications of herding behavior for earnings estimation, risk assessment, and stock returns
www.tandfonline.com [PDF]
… Economists sometimes claim that an earnings figure can be based on estimated future cash flows-that it is intended to be some sort of … positive, we must start with a positive earnings figure if we are to multi- ply it by a standard price-earnings ratio to give an estimate of value …

Economic value added, future accounting earnings, and financial analysts' earnings per share forecastsEconomic value added, future accounting earnings, and financial analysts' earnings per share forecasts
link.springer.com [PDF]
… Economists sometimes claim that an earnings figure can be based on estimated future cash flows-that it is intended to be some sort of … positive, we must start with a positive earnings figure if we are to multi- ply it by a standard price-earnings ratio to give an estimate of value …

Analysts get SAD too: The effect of seasonal affective disorder on stock analysts' earnings estimatesAnalysts get SAD too: The effect of seasonal affective disorder on stock analysts' earnings estimates
www.tandfonline.com [PDF]
… Economists sometimes claim that an earnings figure can be based on estimated future cash flows-that it is intended to be some sort of … positive, we must start with a positive earnings figure if we are to multi- ply it by a standard price-earnings ratio to give an estimate of value …

The impact of introducing estimates of the future on international comparability in earnings expectationsThe impact of introducing estimates of the future on international comparability in earnings expectations
www.tandfonline.com [PDF]
… Economists sometimes claim that an earnings figure can be based on estimated future cash flows-that it is intended to be some sort of … positive, we must start with a positive earnings figure if we are to multi- ply it by a standard price-earnings ratio to give an estimate of value …

Opaque financial reports, R2, and crash riskOpaque financial reports, R2, and crash risk
www.sciencedirect.com [PDF]
… Economists sometimes claim that an earnings figure can be based on estimated future cash flows-that it is intended to be some sort of … positive, we must start with a positive earnings figure if we are to multi- ply it by a standard price-earnings ratio to give an estimate of value …

An economic analysis of a drug-selling gang's financesAn economic analysis of a drug-selling gang's finances
academic.oup.com [PDF]
… Economists sometimes claim that an earnings figure can be based on estimated future cash flows-that it is intended to be some sort of … positive, we must start with a positive earnings figure if we are to multi- ply it by a standard price-earnings ratio to give an estimate of value …

The Information Content of Preliminary Earnings Estimate: Empirical Evidences and Policy Suggestions <span style=[J]' src='/thumbnails/?img=http%3A%2F%2Fen.cnki.com.cn%2FArticle_en%2FCJFDTotal-KJYJ200507007.htm' />The Information Content of Preliminary Earnings Estimate: Empirical Evidences and Policy Suggestions [J]
en.cnki.com.cn [[J]' href='https:/api.miniature.io/pdf?url=en.cnki.com.cn%2FArticle_en%2FCJFDTotal-KJYJ200507007.htm'>PDF]
… Economists sometimes claim that an earnings figure can be based on estimated future cash flows-that it is intended to be some sort of … positive, we must start with a positive earnings figure if we are to multi- ply it by a standard price-earnings ratio to give an estimate of value …



Q&A About Earnings Estimate


Why do market participants rely heavily on earnings estimates?

Market participants rely heavily on earnings estimates to gauge a firm's performance when announcing quarterly or annual results.

How are analysts able to derive estimates?

Analysts use forecasting models, management guidance and fundamental information on the company in order to derive an estimate.

What is an earnings estimate?

An earnings estimate is an analyst's estimate for a company's future quarterly or annual earnings.