Each earnings season, most publicly traded companies will report results that beat analysts’ consensus estimates for sales and earnings. Positive “surprises” are set up and expected, with a typical “beat rate” of 70% or so.
Investors can take a single quarter’s earnings surprise with a grain of salt, especially if the results are only slightly ahead of expectations. But this doesn’t mean you should ignore the estimates. Over long periods, a pattern of rising estimates tends to drive stock prices higher. And the reverse can…
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