Analysts' EPS Revisions
factor.formula
Analyst EPS Revision = (Current Analyst EPS - Analyst EPS Three Months Ago) / |Analyst EPS Three Months Ago|
The formula calculates the difference between the current analyst expected EPS and the expected EPS three months ago, and divides it by the absolute value of the expected EPS three months ago to get the percentage of the analyst's expected revision. The absolute value of the denominator is used to avoid misjudgment of the revision direction when the expected value three months ago is negative. The key parameters in the formula are defined as follows:
- :
The analyst's expected value of the company's future earnings per share at the current point in time (t). Usually the analyst consensus is used, which is the average or median of all analysts' expectations.
- :
The expected value of the company's future earnings per share by analysts three months ago (t-3m). The consensus forecast of analysts is also usually used.
factor.explanation
This factor reflects the changes in market analysts' expectations of a company's earnings. A positive factor value indicates that analysts are more optimistic about the company's future profitability and expect future earnings per share to increase, which may indicate good company fundamentals or positive market sentiment; a negative factor value indicates that analysts are more pessimistic about the company's future profitability and expect earnings per share to decline, which may indicate deteriorating company fundamentals or negative market sentiment. This factor can be used as an important reference for stock selection and timing, capturing investment opportunities brought about by changes in market expectations.