posted on 06-06-2019

Earnings Estimate

Updated October 1, 2019

What is an Earnings Estimate?

An earnings estimate is an estimate of a company's future quarterly or annual profits by a market analyst.

How Does an Earnings Estimate Work?

Earnings estimates are created by analysts who work for investment research companies.

The analyst will research a company's operations, evaluate management's guidance, study the company's operations, and also take into account macroeconomic factors, among other items.

Then the analyst will use this information to make an estimate of the amount the company will earn per share over the next quarter or year.

Why Does an Earnings Estimate Matter?

Earnings estimates are an important predictor of the future growth of a company and thus a useful tool for both current and potential investors when deciding whether to buy or sell stock.


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Related Definitions

Market
A market is a location where buyers and sellers meet to exchange goods and services at prices determined by the forces of supply and demand. See More
Analyst
An analyst gathers and interprets data about securities, companies, corporate strategies, economies or financial markets. Analysts are sometimes called... See More
Analyst
An analyst gathers and interprets data about securities, companies, corporate strategies, economies or financial markets. Analysts are sometimes called... See More
Investment
An investment is an asset intended to produce income or capital gains. See More
Analyst
An analyst gathers and interprets data about securities, companies, corporate strategies, economies or financial markets. Analysts are sometimes called... See More
Guidance
In the stock world, guidance refers to public communication from a company regarding earnings expectations. See More
Macroeconomic Factor
A macroeconomic factor is a characteristic, trend or condition that comes from or applies to a broad aspect of an economy rather than a certain population. See More
Year
In the business world, a year is a 12-month period, four-quarter period, or 13-period stretch of time. It is not always 365 days long, though it is usually... See More

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