Great Expectations: Earnings Estimates and Their Impact on Stock Prices

Great Expectations: Earnings Estimates And Their Impact On Stock Prices Splash image

How often have you seen a stock’s price fall after the company announced increased earnings?

Or, just recently, why did the stock of investment banking firm Lehman Brothers soar after it announced that its fiscal first-quarter earnings fell 57%?

In these instances, actual earnings did not turn out as the market expected.

...To continue reading this article you must be registered with AAII.

Gain exclusive access to this article and all of the member benefits and investment education AAII offers.
JOIN TODAY for just $29.
Log in
Already registered with AAII? Login to read the rest of this article.

Register for FREE
to read this article and receive access to future articles.


Michael from Kansas posted over 2 years ago:

How about an article on Operating Profit After Capital Charge (OPACC) and an SIP screen (1st Cut)? How would you calculate OPACC with SIP?


Charles from Illinois posted over 2 years ago:

Michael, I'll pass this along to John Bajkowski as a possible idea. -Charles Rotblut

Richard from Washington posted over 2 years ago:

It would be helpful to have more detailed data on earnings surprises. For example, if one buys a stock after a positive earnings surprise, how long does the positive effect of the surprise last (on the average) and how big is the effect? Also, how does the length and size of the effect depend on the size of the surprise?
Have there been academic studies of the effects described in the article? Could you please provide references so that we could read those studies?

You need to log in as a registered AAII user before commenting.
Create an account

Log In