Analysts' expected EPS adjustments
factor.formula
Adjustment amount = (current expected EPS - expected EPS three months ago) / |expected EPS three months ago|
This formula calculates the adjustment in analysts' expected earnings per share (EPS). The numerator is the difference between the current expected EPS and the expected EPS three months ago, and the denominator is the absolute value of the expected EPS three months ago. The denominator is taken in absolute value to avoid the sign reversal of the factor when the denominator is negative, and to standardize the adjustment to make it more comparable.
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The average of analysts' current expectations for a company's earnings per share for the next one or more reporting periods. This expectation is typically based on the consensus estimate of all analysts covering the stock.
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The average expected earnings per share of analysts for the company in one or more future reporting periods three months ago, calculated using the same method as the current expected EPS.
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The absolute value of the EPS expected three months ago ensures that the denominator is positive, avoids the situation where the denominator is 0, and makes the results more comparable.
factor.explanation
This factor captures the dynamic changes in market sentiment and fundamentals by quantifying the extent to which analysts have changed their expectations for a company's earnings per share. A positive value indicates that analysts have raised their expectations for the company's EPS, reflecting the market's optimism about the company's earnings prospects; a negative value indicates that analysts have lowered their EPS expectations, reflecting the market's concerns about the company's profitability. The absolute value of the adjustment reflects the market's sensitivity to changes in the company's earnings forecasts. Changes in this factor can be used as an indicator to measure the extent to which the market has revised its expectations for a company's earnings, and can be used for stock selection and portfolio management. It should be noted that this factor may be affected by analyst expectation bias, so it should be combined with other factors for comprehensive analysis.