How to Profit From Revisions in Analysts' Earnings Estimates
by Wayne A. Thorp
Earnings play a pivotal role in the long-term viability of a company, as well as its investment prospects. The market is forward-looking and stock prices are established, in part, on the basis of expectations for the companys future. Over time, prices adjust as expectations change or are proven wrong.
In short, while companies are often rewarded for having strong historical growth, changes in earnings expectations, no matter how slight, can have a significant impact on a stocks price.
What drives estimates?
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