What is an Earnings Surprise?
It is usually a good sign for bulls when a company’s reported quarterly or annual earnings that beat, meaning better than, what analyst expected. This means the company did well in the recent months and may continue to do well in the coming months. Analysts forecast earnings by taking into account past performance, a company's guidance and various market conditions.
Why You Care
A stock's price could rise sharply after an earnings beat. If the company's report significantly beat analysts and investors expectations, there will likely be a gradual increase in the stock price as time goes by.
But remember, an earnings beat is just one aspect that investors look at when making their trading decisions. Sometimes, the promise of a future product or business opportunities is more important for a company’s stock price. As an investor, you want companies with promising futures and opportunities, not just success in the past.
Earnings Disappointment (Miss),
Quarterly Earnings Report,
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