AAII Stock Ideas: Earnings Estimate Revisions Screening Strategies

Current Trends in Earnings Estimate Revisions

The Impact of Earnings Surprises

Stocks With Upward Revisions May Outperform

Screening for Earnings Estimate Revisions

Stocks With Downward Revisions Typically Underperform

Changing Expectations Drive Stock Prices

  • Know the consensus earnings forecast of a stock you own or are interested in.
  • Realize that the stock price already reflects the general consensus about future earnings. Be aware that if a stock is highly touted, the basis for the recommendation should be an earnings forecast by analysts significantly above the prevailing opinion.
  • Ask for and carefully evaluate the foundation of an earnings forecast that deviates substantially from the consensus before investing.
  • Significant earnings surprises, positive or negative, probably have a fairly long-term effect on a stock’s price as analysts revise long-term earnings forecasts accordingly.

Today’s Estimate Revisions Stock Ideas

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American Association of Individual Investors

American Association of Individual Investors

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Since inception in 1978, the nonprofit AAII has helped over 2 million individuals build their investment wealth through programs of education and publications.