What is Consensus estimate?
Konsensus prognoz
In short
The average of the EPS and revenue estimates of analysts covering a company. Reported results are compared with this number.
Also known as: estimate, Wall Street estimate
The consensus estimate is the average (sometimes the median) of the EPS and revenue estimates from the Wall Street analysts who cover a company. When the earnings report comes out, results are compared with this number: better is a "beat", worse is a "miss".
How it is formed
Each analyst builds a model from the company's guidance, industry data and past results. Data providers collect these estimates and publish the average. Because providers include different sets of analysts, their consensus figures can differ slightly.
Why it matters to the market
The price usually already reflects expectations. So the market cares less about the result itself than about how far it deviates from expectations — the earnings surprise. Even a good result can push the price down if it falls short of consensus.
What to watch
- Estimate revisions: whether consensus is rising or falling in the weeks before the report is a signal in itself.
- Dispersion: a wide gap between the lowest and highest estimate means high uncertainty and a higher chance of a big post-report move.
- The "whisper number": sometimes the market's unofficial expectation is above the official consensus; the price can fall even if results beat consensus.
Example
Twelve analysts cover a hypothetical company. Their quarterly EPS estimates range from $1.10 to $1.30, averaging $1.20 — that is the consensus. Revenue consensus is $5.0 billion.
The report shows EPS of $1.25 and revenue of $5.1 billion:
- EPS difference: $1.25 − $1.20 = $0.05, i.e. 0.05 ÷ 1.20 ≈ +4.2% (beat)
- Revenue: ($5.1 − $5.0) ÷ $5.0 = +2% (beat)
But if consensus had been cut from $1.28 to $1.20 during the month before the report, the "beat" mostly reflects lowered expectations — and the market may pay less attention to it.
Mistakes and tips
Look at revenue consensus as well as EPS — beating on EPS by cutting costs is easy, beating on revenue is not.
Track how consensus changed before the report: clearing a lowered bar means little.
Consensus is not a guarantee — analysts get it wrong too; use it as a starting point.
Frequently asked questions
- Where can I find the EPS consensus estimate?
- Many financial websites and brokers show consensus EPS and revenue in their earnings calendars. Figures can differ slightly between sources.
- Why does a stock fall even when it beats consensus?
- The market may have expected even more, guidance for the next period may be weak, or another figure such as revenue may have come in below expectations.
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