The First Cut: Revised Earnings Estimates
Earnings are a key variable used to value stocks. Slight changes in expectations of future earnings or the earnings growth rate normally translate into a significant and lasting impact on stock prices.
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Services such as I/B/E/S and Reuters calculate consensus earnings estimates by tracking the estimates of thousands of analysts. Keep in mind that the current price usually reflects the consensus earnings estimate. However, tracking significant revisions to these consensus estimates can be a rewarding investment strategy.
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