Business and Personal Finance Dictionary

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• EARNINGS ESTIMATE
  
  Professional stock analysts use mathematical models that weigh companies' financial data to predict their future earnings per share on a quarterly, annual, and long-term basis. Investment research companies, such as Zacks, publish averages of analysts' estimates, called consensus estimates, for stocks that are closely followed by market professionals. When a company's earnings report either exceeds or fails to meet analysts' estimates, it's called an earnings surprise. An upside surprise occurs when a company reports higher earnings than analysts predicted and usually triggers an increase in the stock price. A negative surprise, on the other hand, occurs when a company fails to meet expectations and often causes the stock's price to fall. Companies try hard to avoid negative surprises since even a small deviation can create a big stir.
  
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