Earnings Surprise

When the earnings reported in a company's quarterly or annual report are above or below analysts' earnings estimates.

Investopedia Says:
Company earnings are watched closely by many analysts and investors. When a positive earnings surprise occurs, share price will usually increase. A negative earnings surprise will usually result in a decline in share price.

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Earnings Report that reports a higher or lower profit than analysts have projected. If earnings are higher than expected, a company's stock price will usually rise sharply. If profits are below expectations, the company's stock will often plunge. Many analysts on Wall Street study earnings surprises very carefully on the theory that when a company reports a positive or negative surprise, it is typically followed by another surprise in the same direction. Two firms that follow general trends in earnings surprises are First Call and Zacks Estimate System.

A company's announced net income for the reporting period that is above or below that expected by analysts (i.e., the consensus forecast). Stock price will typically increase if the earnings report is better than anticipated with the opposite effect if the earnings report is less than that expected. In fact, if earnings reported are much lower than those being forecasted by securities analysts, a drastic falloff in stock price may occur because of the disappointment. An example of a company that closely monitors earnings surprises is First Call (www.firstcall.com).