In this video, you will learn about earnings estimate.
#earningsestimate #financials #wallstreetmojo #companyresults #financialresults
Chapters:
00:00 – Introduction
00:40 – What is the earnings estimate?
01:29 – How to calculate earnings per share estimation?
06:29 – Earnings surprise and how does it affect share price?
07:25 – Conclusion
What is the earnings estimate?
Before companies release their financial results, analysts usually forecast the company’s financial results.
They use various methods to determine how well or poorly the company did in the quarter or the entire financial year. This is what the earnings estimate is.
Earnings estimate is significant as it allows investors to have a benchmark to compare the company’s performance, and accordingly, they can plan their investments.
(Explained in detail in the video)
How to calculate earnings per share estimation?
Earnings estimate is calculated by calculating how much the company would earn in total and then dividing it by the number of outstanding shares to give EPS, which stands for Earnings Per Share.
Analysts have to study all company revenue streams and work around them to figure out how much a company will earn in the next quarter or financial year.
(Explained in detail in the video)
Earnings surprise and how does it affect share price?
When the company declares its results, it will either beat the estimate, that is, the company performed better than what the analysts forecasted, or the company would’ve performed poorly, and their results were below the estimates.
If it beats the estimate, it’s a good sign, and the share price can go up. But if it fails to keep up with estimates, the share price might go down.
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