Earnings Estimates


One lesson many investors quickly learn is that the market is forward-looking. Security prices are dictated by expectations, and prices fluctuate as these expectations are affirmed or are proven to be unfounded. The most frequently followed measure of market expectations combines analyst projections for a company’s earnings into a consensus earnings estimate. Stock Investor Pro provides a variety of earnings estimate data from I/B/E/S, which is part of Thomson Reuters. Users will find this data on the Estimates tab of the Stock Notebook within Stock Investor Pro. In this installment of Stock Investor News, we provide a discussion of this data, as well as how it may be used in the screening process.

The Estimates tab for Google Inc. (GOOGL) shows a large number of analysts providing quarterly and annual estimates. Roughly 54% of the companies in the Stock Investor database are tracked by at least one analyst.

The consensus earnings estimate for Google’s current fiscal quarter ending June 2014 is $6.26 per share, using data as of May 16, 2014. For the current fiscal year ending December 2014, analysts are expecting Google to earn $26.75 per share. The current consensus estimate of growth in earnings per share over the next three to five years is 15.9% on an annualized basis.

Examining the range of estimates, as indicated by the high and low estimates for each period, provides an indication of the degree of consensus among the analysts. A wide range of estimates would point to great disagreement among analysts, indicating greater uncertainty and a greater chance for an earnings surprise (both positive and negative). For the current fiscal year, analysts tracking Google see earnings coming in at between $25.15 per share and $28.36 per share.

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