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Consensus estimate

Also known as: consensus EPS, Wall Street consensus, analyst consensus, street estimate

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A consensus estimate is the average (or sometimes median) of the forecasts published by sell-side analysts covering a company for a specific metric and period, most commonly quarterly EPS and revenue. It is the benchmark used to judge whether a company beat or missed.

How it works

Data vendors collect estimates from brokerage analysts and compute a consensus. Different vendors can show slightly different numbers because they include different analysts, drop stale estimates at different times, and may track adjusted versus GAAP EPS differently. Consensus exists for:

  • Quarterly and annual EPS and revenue.
  • Company-specific metrics such as subscribers, same-store sales or gross margin.
  • Longer-term periods, which typically have fewer contributors and wider dispersion.

Estimates move over the quarter. Analysts revise after company guidance, industry data, conferences and peers' results. The direction of revisions into a report (rising or falling) is itself watched as a signal.

Why it matters for traders

The earnings surprise is measured against consensus, so it frames the immediate reaction. A few nuances:

  • Thin coverage: a small-cap with two analysts has a fragile consensus; one outlier estimate can skew it.
  • Dispersion: a wide range between high and low estimates means more uncertainty and often a bigger move.
  • Stale estimates: an analyst who has not updated after guidance can distort the average.
  • Real bar: buy-side expectations, sometimes captured by the whisper number, can differ from published consensus.

Example

Five analysts cover Pinecrest Foods (ticker PCFD) with quarterly EPS estimates of $0.60, $0.62, $0.63, $0.65 and $0.70. The mean consensus is $3.20 / 5 = $0.64 and the median is $0.63. If PCFD reports $0.66, it beats the mean by $0.02, or about 3%.

FAQ

Who sets the consensus estimate?

No one sets it. Data providers calculate it from individual analyst forecasts.

Why do different websites show different consensus numbers?

They draw from different sets of analysts and handle stale or adjusted estimates differently.

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Related terms

Earnings surprise (beat or miss)The difference between a company's reported earnings and the analyst consensus estimate, described as a beat when above and a miss when below.Whisper numberAn unofficial earnings expectation, often higher than the published consensus, that reflects what traders believe a company will actually report.Sell-side analystA research analyst at a brokerage or investment bank who publishes ratings, price targets and earnings estimates on stocks for the firm's clients.GuidanceA company's own forecast of future results, such as revenue, EPS or margins for the next quarter or year, usually issued with earnings.Earnings per share (EPS)A company's net income available to common shareholders divided by its weighted average shares outstanding, reported as basic and diluted figures.

Part of the Quantisnow financial glossary. For longer explainers, see the investing guides. Educational content, not investment advice.