Investment Opportunity in Stocks
Present and future EPS (Earnings per Share) values will determine the future price of your stocks. Be prepared, get a free report for the next earnings surprises.
A critical time for every stock traded on the stock exchange is when corporate earnings are announced. Stock prices are very sensitive to earning results when evaluated in light of Wall Street's expectations. Stock prices could gain or lose as much as 20% of their value in one day when faced with "missed Wall Street estimates" or "beaten Wall Street estimates." Wall Street "estimates" are arrived by combined (average) estimates of the analysts who cover a public company.
How accurate are Wall Street Estimates?
There is substantial evidence in the professional financial literature that Wall Street reports biased earnings resulting in a significant difference between the consensus earnings reported by Wall Street and actual earnings.
For example, in a research paper entitled "Self-Fulfilling Stock Recommendation" written by scholars from Purdue and The London School of Economics, it is reported that this bias can be attributed to the human factor where analysts have a vested interest to report low or high earning forecasts with a view to enhance their own recommendations for buying or selling stocks. The lower the earnings estimate, the more likely the stock will increase in price due to "earnings surprise" or, similarly, the higher the earnings estimate, the more likely the stock will decline because of "missing" Wall Street's estimates.
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Another factor contributing to producing biased estimates is based on statistical considerations. The consensus estimate is an average and will be affected by the number of analysts who cover the stock and their diversity of opinion. Let me give you an example: If you put one leg in cold water and the other one in hot water, then, on average you feel fine. Many Wall Street stocks are covered by only one or two analysts and their consensus value could be inaccurate such as putting one leg in hot water and the other in cold water.
Based on our own research, we found that that 400 companies reported earnings between April and November 2011:- 62.5% of them "exceeded Wall Street's estimates." If Wall Street could improve the accuracy of their estimates, then less companies would be able to beat the consensus estimates.
Can we provide more accurate and reliable estimates than Wall Street provides?
The answer is YES.
We found that Wall Street underestimates the actual earnings by -.039¢ while our forecasting estimated it by less than 0.0025¢. The bottom line, based on our statistical model, is that we are able to tell you prior to the earning announcements the probability for an upcoming positive or negative surprise. Our final EPS forecast uses the original Wall Street estimate and adjusts it by using our unbiased forecasting estimate. This reduces the forecasting error.
If you are a portfolio manager, you will be interested to hedge stocks in your portfolio that are about to "miss" Wall Street's estimate and you will be interested to increase your position for stocks that are about to "exceed" Wall Street's estimates. We provide the probability for missing or exceeding the Wall Street estimates.
Why can we do better than Wall Street?
Our goal is simple. We would like to give you UNBIASED EARNINGS ESTIMATES. Our analysis is based only on empirical/historical data. we are free of any conflict of interest because we do not provide "buy" or "sell" recommendations for stocks.
This is achieved by using proprietary advanced forecasting statistical methods developed over the last several years. This method of forecasting is not used by Wall Street. Furthermore, we provide a forecast range for each stock. The high and low forecast value known as confidence limits are based solely on statistical considerations. This margin of error is objective whereas the low and high EPS values reported by Wall Street reflect the divergence of analysts' opinions and can be used as a scientific margin of error.
We estimate the seasonal impact of each company on its business (using historical data of 20-25 QTR (quarters)) and use it to forecast the next 4 QTR's EPS.
We also provide reliable and accurate forecasts of corporate REVENUE. Our weekly service will make you a winning investor in today's volatile market because we will identify companies that are about to "beat" or "miss" the Wall Street consensus estimate for EPS or revenue.
Our professional team (PhD in statistics and quantitative analysis) has developed proprietary models which have been rigorously tested over the last several years. Our models forecast ESP taking into consideration seasonal factors affecting a given quarter and revenue forecast.