Glossary·Written by a CPA
Consensus estimate
The average of what Wall Street analysts expect a company to report for revenue or earnings in a given quarter or year.
The consensus estimate is basically just the average forecast from the analysts who cover a stock. When you hear that a company beat or missed, it's almost always being compared to this number.
Different data providers can have slightly different consensus numbers, because they pull from different groups of analysts, and estimates move around in the weeks before earnings.
For you, the consensus is helpful as a measuring stick for what the market was expecting... the stock's reaction often has more to do with how results compare to that expectation than with whether the results were good in some absolute sense.
The catch. There's often an unofficial whisper number that's higher than the published consensus, which is one reason a stock can fall even after a beat.
Where I talk about it
- APP Stock: Sales Up 55%, Stock Down 60%. What Broke? at 5:48
- AAOI Stock at $69: The $160 Target Before Earnings at 1:52
- Tesla Stock at $480? The SpaceX Merger Math (TSLA) at 1:34
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This is education, not tax or investment advice. I'm a CPA, but I'm not your CPA. Full disclaimer.