Consensus Estimates

Also known as: Street Estimates, Analyst Consensus, The Street

Consensus estimates are the average of analyst forecasts for a company’s key metrics, forming the expectations a company is measured against each quarter.

Consensus estimates are the combined forecasts of the analysts who cover a stock, averaged into a single expectation for revenue, earnings per share, and other metrics. Together they form what the market calls “the Street.”

Why they are the bar

A company is rarely judged against its own results in isolation. It is judged against consensus. Reporting earnings above consensus is a beat, and below is a miss, and the gap often matters more to the share price than the underlying numbers.

Managing the relationship

Effective investor relations involves understanding where consensus sits and why, and shaping guidance so expectations stay realistic. Letting consensus drift far from what the business can deliver sets up an avoidable earnings surprise.

Related terms

Earnings Per Share

Earnings per share (EPS) is a company’s net profit divided by its shares outstanding, the per-share measure of profitability that anchors the P/E ratio.

Forward Guidance

Forward guidance is the forward-looking expectations a company shares with investors, typically revenue, earnings, or other key metrics for upcoming periods.

Earnings Surprise

An earnings surprise is the difference between a company’s reported results and consensus estimates, with beats and misses often driving sharp share-price moves.

Sell-Side Analyst

A sell-side analyst works at a brokerage or investment bank and publishes research, ratings, and estimates on companies for the investing clients the firm serves.

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