Earnings Surprise Candidates in Europe – Citi

Source: Citi

Source: Citi

And here’s how Citi builds the above list:

« The Citi Research earnings surprise forecast model attempts to predict which stocks should experience an earnings surprise during the next reporting period and whether that surprise will be positive or negative. We define an earnings surprise as the actual reported quarterly EPS less the mean consensus EPS estimate, all divided by the standard deviation of the estimates. This ratio is called the standardized unexpected earnings (SUE) and it normalizes earnings surprises by the degree of analyst uncertainty. Thus, a large standard deviation of analysts’estimates for a specific company implies a high degree of uncertainty over the company’s earnings prospects. Any potential surprise is, therefore, probably already discounted. On the other hand, when the range of estimates is narrow, even a small surprise can be a significant event. »

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