QQQ   337.27 (+1.86%)
AAPL   175.05 (+1.37%)
MSFT   318.52 (+1.44%)
META   246.85 (+1.80%)
GOOGL   122.83 (+1.65%)
AMZN   118.15 (+2.29%)
TSLA   176.89 (+1.74%)
NVDA   316.78 (+4.97%)
NIO   7.82 (-2.62%)
BABA   85.77 (-5.41%)
AMD   107.93 (+4.03%)
T   16.55 (-0.66%)
F   11.64 (+1.22%)
MU   67.57 (+4.08%)
CGC   1.05 (+0.00%)
GE   104.01 (+0.52%)
DIS   93.76 (+1.07%)
AMC   5.07 (-0.59%)
PFE   36.48 (-0.73%)
PYPL   61.27 (-0.31%)
NFLX   371.29 (+9.22%)
QQQ   337.27 (+1.86%)
AAPL   175.05 (+1.37%)
MSFT   318.52 (+1.44%)
META   246.85 (+1.80%)
GOOGL   122.83 (+1.65%)
AMZN   118.15 (+2.29%)
TSLA   176.89 (+1.74%)
NVDA   316.78 (+4.97%)
NIO   7.82 (-2.62%)
BABA   85.77 (-5.41%)
AMD   107.93 (+4.03%)
T   16.55 (-0.66%)
F   11.64 (+1.22%)
MU   67.57 (+4.08%)
CGC   1.05 (+0.00%)
GE   104.01 (+0.52%)
DIS   93.76 (+1.07%)
AMC   5.07 (-0.59%)
PFE   36.48 (-0.73%)
PYPL   61.27 (-0.31%)
NFLX   371.29 (+9.22%)
QQQ   337.27 (+1.86%)
AAPL   175.05 (+1.37%)
MSFT   318.52 (+1.44%)
META   246.85 (+1.80%)
GOOGL   122.83 (+1.65%)
AMZN   118.15 (+2.29%)
TSLA   176.89 (+1.74%)
NVDA   316.78 (+4.97%)
NIO   7.82 (-2.62%)
BABA   85.77 (-5.41%)
AMD   107.93 (+4.03%)
T   16.55 (-0.66%)
F   11.64 (+1.22%)
MU   67.57 (+4.08%)
CGC   1.05 (+0.00%)
GE   104.01 (+0.52%)
DIS   93.76 (+1.07%)
AMC   5.07 (-0.59%)
PFE   36.48 (-0.73%)
PYPL   61.27 (-0.31%)
NFLX   371.29 (+9.22%)
QQQ   337.27 (+1.86%)
AAPL   175.05 (+1.37%)
MSFT   318.52 (+1.44%)
META   246.85 (+1.80%)
GOOGL   122.83 (+1.65%)
AMZN   118.15 (+2.29%)
TSLA   176.89 (+1.74%)
NVDA   316.78 (+4.97%)
NIO   7.82 (-2.62%)
BABA   85.77 (-5.41%)
AMD   107.93 (+4.03%)
T   16.55 (-0.66%)
F   11.64 (+1.22%)
MU   67.57 (+4.08%)
CGC   1.05 (+0.00%)
GE   104.01 (+0.52%)
DIS   93.76 (+1.07%)
AMC   5.07 (-0.59%)
PFE   36.48 (-0.73%)
PYPL   61.27 (-0.31%)
NFLX   371.29 (+9.22%)

Earnings Beats and Misses
 

Wall Street equities research analysts issue quarterly earnings per share (EPS) estimates for most publicly-traded companies. The average of their EPS estimates is often referred to as the consensus EPS estimate. When companies actual earnings vary significantly from analysts' earnings estimates, this is referred to as an earnings surprise. This report shows the companies that have beat or missed analysts' earnings expectations by the largest margin during the last 90 days. Learn more about earnings surprises.

MarketRank evaluates a company based on community opinion, dividend strength, institutional and insider ownership, earnings and valuation, and analysts forecasts.
Available with a MarketBeat All Access Subscription
MarketRank™Upgrade to All Access to use the All Ranks Filter
Media sentiment refers to the percentage of positive news stories versus negative news stories a company has received in the past week.
Available with a MarketBeat All Access Subscription
Media SentimentUpgrade to All Access to use the All Sentiments Filter
Analyst consensus is the average investment recommendation among Wall Street research analysts.
Available with a MarketBeat All Access Subscription
Analyst ConsensusUpgrade to All Access to use the All Ratings Filter
CompanyEarnings DateConsensus EPSActual EPSBeat/MissRevenue EstimateActual RevenueActions
MicroStrategy stock logo
MSTR
MicroStrategy
5/1/2023$0.49$30.59$30.10$119.04 million$121.90 million    
NVR stock logo
NVR
NVR
4/25/2023$88.96$99.89$10.93$2.09 billion$2.13 billion  
Kineta stock logo
KA
Kineta
4/3/2023($8.05)$1.13$9.18N/AN/A
Novo Nordisk A/S stock logo
NVO
Novo Nordisk A/S
5/4/2023$1.27$8.64$7.37$7.86 billion$7.69 billion
Taiwan Semiconductor Manufacturing stock logo
TSM
Taiwan Semiconductor Manufacturing
4/20/2023$1.21$7.98$6.77$516.87 billion$508.63 billion    
Stronghold Digital Mining stock logo
SDIG
Stronghold Digital Mining
3/29/2023($4.90)$1.60$6.50$21.70 million$23.41 million    
Arcturus Therapeutics stock logo
ARCT
Arcturus Therapeutics
3/28/2023($1.86)$4.33$6.19$134.54 million$160.29 million
Dillard's stock logo
DDS
Dillard's
2/21/2023$8.85$14.50$5.65$2.11 billion$2.13 billion
SilverBow Resources stock logo
SBOW
SilverBow Resources
3/1/2023$2.42$7.65$5.23$194.77 million$198.98 million
Avis Budget Group stock logo
CAR
Avis Budget Group
5/1/2023$3.34$7.72$4.38$2.54 billion$2.56 billion    
Booking stock logo
BKNG
Booking
2/23/2023$20.97$24.74$3.77$3.90 billion$4.05 billion      
InterDigital stock logo
IDCC
InterDigital
5/4/2023$0.62$4.21$3.59$100.58 million$202.40 million    
Bally's stock logo
BALY
Bally's
5/9/2023($0.31)$3.24$3.55$595.31 million$598.70 million  
Credit Suisse Group stock logo
CS
Credit Suisse Group
4/24/2023($0.15)$3.33$3.48N/A$19.96 billion
Albemarle stock logo
ALB
Albemarle
5/4/2023$6.93$10.32$3.39$2.74 billion$2.58 billion      
AutoZone stock logo
AZO
AutoZone
2/28/2023$21.33$24.64$3.31$3.56 billion$3.69 billion    
Sinclair Broadcast Group stock logo
SBGI
Sinclair Broadcast Group
5/3/2023($0.59)$2.64$3.23$774.56 million$773.00 million      
CNX Resources stock logo
CNX
CNX Resources
4/27/2023$0.44$3.61$3.17$479.58 million$455.60 million    
Nabors Industries stock logo
NBR
Nabors Industries
4/24/2023$1.06$4.11$3.05$767.96 million$789.01 million    
Alpha Metallurgical Resources stock logo
AMR
Alpha Metallurgical Resources
5/8/2023$14.22$17.01$2.79$858.50 million$911.24 million      
Voyager Therapeutics stock logo
VYGR
Voyager Therapeutics
5/9/2023$0.15$2.94$2.79$99.33 million$150.48 million
Mawson Infrastructure Group stock logo
MIGI
Mawson Infrastructure Group
3/23/2023($1.56)$1.14$2.70N/AN/A    
Dillard's stock logo
DDS
Dillard's
5/11/2023$9.07$11.77$2.70$1.57 billion$1.58 billion
PENN Entertainment stock logo
PENN
PENN Entertainment
5/4/2023$0.38$3.05$2.67$1.59 billion$1.67 billion    
Precision Drilling stock logo
PDS
Precision Drilling
4/26/2023$2.96$5.57$2.61$527.81 million$558.60 million  
argenx stock logo
ARGX
argenx
3/2/2023($3.08)($0.70)$2.38$177.11 million$182.12 million
Regeneron Pharmaceuticals stock logo
REGN
Regeneron Pharmaceuticals
5/4/2023$7.71$10.09$2.38$3.00 billion$3.16 billion    
Agios Pharmaceuticals stock logo
AGIO
Agios Pharmaceuticals
2/23/2023($1.59)$0.67$2.26$4.42 million$4.31 million
Galapagos stock logo
GLPG
Galapagos
5/4/2023($1.83)$0.43$2.26$76.88 million$191.93 million  
Solid Biosciences stock logo
SLDB
Solid Biosciences
3/23/2023($2.70)($0.68)$2.02N/AN/A
Bread Financial stock logo
BFH
Bread Financial
4/27/2023$7.11$9.08$1.97$1.06 billion$1.29 billion    
Booking stock logo
BKNG
Booking
5/4/2023$9.63$11.60$1.97$3.75 billion$3.78 billion      
Moderna stock logo
MRNA
Moderna
5/4/2023($1.77)$0.19$1.96$1.17 billion$1.86 billion    
Tonix Pharmaceuticals stock logo
TNXP
Tonix Pharmaceuticals
3/13/2023($5.38)($3.50)$1.88N/AN/A
TravelCenters of America stock logo
TA
TravelCenters of America
2/28/2023$1.12$2.99$1.87$2.53 billion$2.66 billion
BioNTech stock logo
BNTX
BioNTech
5/8/2023$0.18$2.05$1.87$1.09 billion$1.28 billion    
Two Harbors Investment stock logo
TWO
Two Harbors Investment
5/1/2023($1.04)$0.80$1.84N/A$116.59 million    
argenx stock logo
ARGX
argenx
5/7/2023($2.34)($0.52)$1.82$191.24 million$229.76 million
POINT Biopharma Global stock logo
PNT
POINT Biopharma Global
3/27/2023($0.26)$1.53$1.79$260.00 million$226.58 million  
Reinsurance Group of America stock logo
RGA
Reinsurance Group of America
5/5/2023$3.37$5.16$1.79$4.23 billion$4.25 billion    
Bakkt stock logo
BKKT
Bakkt
3/9/2023($0.21)$1.52$1.73$18.30 million$15.60 million    
PDC Energy stock logo
PDCE
PDC Energy
5/3/2023$2.91$4.64$1.73$750.29 million$957.70 million  
Chipotle Mexican Grill stock logo
CMG
Chipotle Mexican Grill
4/25/2023$8.89$10.50$1.61$2.34 billion$2.40 billion    
Cal-Maine Foods stock logo
CALM
Cal-Maine Foods
3/28/2023$5.09$6.62$1.53$898.93 million$997.49 million
Medifast stock logo
MED
Medifast
2/21/2023$2.18$3.70$1.52$306.70 million$337.25 million
Orchard Therapeutics stock logo
ORTX
Orchard Therapeutics
5/15/2023($1.61)($0.12)$1.49$6.48 million$1.24 million
Teekay Tankers stock logo
TNK
Teekay Tankers
5/11/2023$3.65$5.13$1.48N/A$394.66 million  
SEA stock logo
SE
SEA
3/7/2023($0.75)$0.72$1.47$3.05 billion$3.45 billion    
Midwest stock logo
MDWT
Midwest
5/15/2023($0.10)$1.36$1.46$15.70 million$38.45 million
Formula One Group stock logo
FWONK
Formula One Group
3/1/2023$0.09$1.55$1.46$726.99 million$754.00 million
Warrior Met Coal stock logo
HCC
Warrior Met Coal
5/3/2023$2.12$3.57$1.45$413.82 million$509.70 million    
Pampa Energía stock logo
PAM
Pampa Energía
3/9/2023$0.60$2.05$1.45$420.94 million$448.00 million
Shift Technologies stock logo
SFT
Shift Technologies
3/28/2023($5.07)($3.65)$1.42$81.28 million$65.57 million
Pampa Energía stock logo
PAM
Pampa Energía
5/10/2023$1.15$2.56$1.41$401.41 million$431.00 million  
DouYu International stock logo
DOYU
DouYu International
3/20/2023$0.01$1.42$1.41$244.49 million$243.73 million    
HCI Group stock logo
HCI
HCI Group
5/9/2023$0.09$1.50$1.41$118.27 million$129.03 million  
Splunk stock logo
SPLK
Splunk
3/1/2023($0.16)$1.25$1.41$1.07 billion$1.25 billion
Ligand Pharmaceuticals stock logo
LGND
Ligand Pharmaceuticals
5/4/2023$0.89$2.28$1.39$33.55 million$43.98 million    
Builders FirstSource stock logo
BLDR
Builders FirstSource
5/3/2023$1.63$2.96$1.33$3.57 billion$3.88 billion  
Carvana stock logo
CVNA
Carvana
2/23/2023($2.30)($0.97)$1.33$3.02 billion$2.84 billion
AMC Networks stock logo
AMCX
AMC Networks
2/17/2023$1.23$2.52$1.29$937.07 million$964.50 million    
M/I Homes stock logo
MHO
M/I Homes
4/26/2023$2.36$3.64$1.28$787.90 million$1.00 billion      
Medifast stock logo
MED
Medifast
5/1/2023$2.40$3.67$1.27$319.50 million$349.00 million    
Chesapeake Energy stock logo
CHK
Chesapeake Energy
2/21/2023$2.96$4.22$1.26$1.80 billion$2.20 billion    
Group 1 Automotive stock logo
GPI
Group 1 Automotive
4/26/2023$9.70$10.93$1.23$3.92 billion$4.10 billion      
BioNTech stock logo
BNTX
BioNTech
3/27/2023$8.04$9.26$1.22$3.87 billion$4.28 billion    
KE stock logo
BEKE
KE
3/16/2023$0.07$1.29$1.22$16.21 billion$16.75 billion    
CONSOL Energy stock logo
CEIX
CONSOL Energy
5/2/2023$5.34$6.55$1.21$594.30 million$688.61 million    
Orchard Therapeutics stock logo
ORTX
Orchard Therapeutics
3/6/2023($1.80)($0.60)$1.20$5.38 million$6.99 million
ZIM Integrated Shipping Services stock logo
ZIM
ZIM Integrated Shipping Services
3/13/2023$2.26$3.44$1.18$2.06 billion$2.19 billion    
Assurant stock logo
AIZ
Assurant
5/2/2023$2.32$3.49$1.17$2.60 billion$2.64 billion    
Martin Marietta Materials stock logo
MLM
Martin Marietta Materials
5/4/2023$0.99$2.16$1.17$1.27 billion$1.35 billion    
Eagle Pharmaceuticals stock logo
EGRX
Eagle Pharmaceuticals
3/13/2023($0.54)$0.62$1.16$58.99 million$60.70 million
Eterna Therapeutics stock logo
ERNA
Eterna Therapeutics
3/20/2023($2.40)($1.24)$1.16N/AN/A
United Microelectronics stock logo
UMC
United Microelectronics
4/26/2023$0.16$1.31$1.15$54.64 billion$54.21 billion  
Hubbell stock logo
HUBB
Hubbell
4/25/2023$2.46$3.61$1.15$1.25 billion$1.29 billion    
Ulta Beauty stock logo
ULTA
Ulta Beauty
3/9/2023$5.53$6.68$1.15$2.99 billion$3.23 billion    
MercadoLibre stock logo
MELI
MercadoLibre
2/23/2023$2.11$3.25$1.14$2.96 billion$3.00 billion    
European Wax Center stock logo
EWCZ
European Wax Center
3/9/2023$0.05$1.18$1.13$51.32 million$53.52 million
Markel stock logo
MKL
Markel
4/27/2023$16.23$17.35$1.12$3.38 billion$3.64 billion    
Caterpillar stock logo
CAT
Caterpillar
4/27/2023$3.79$4.91$1.12$15.27 billion$15.86 billion      
Assertio stock logo
ASRT
Assertio
3/8/2023$0.23$1.34$1.11$49.57 million$50.35 million
Acutus Medical stock logo
AFIB
Acutus Medical
3/16/2023($0.70)$0.41$1.11$4.80 million$4.96 million
Arrowhead Pharmaceuticals stock logo
ARWR
Arrowhead Pharmaceuticals
5/2/2023($0.65)$0.45$1.10$45.48 million$146.27 million    
Coinbase Global stock logo
COIN
Coinbase Global
5/4/2023($1.44)($0.34)$1.10$653.30 million$772.53 million  
Safehold stock logo
SAFE
Safehold
4/26/2023($0.69)$0.41$1.10$75.25 million$78.30 million    
AstraZeneca stock logo
AZN
AstraZeneca
4/26/2023$0.86$1.92$1.06$10.61 billion$10.88 billion  
Encore Wire stock logo
WIRE
Encore Wire
4/25/2023$5.44$6.50$1.06$684.01 million$660.50 million    
Equillium stock logo
EQ
Equillium
3/23/2023($0.33)$0.72$1.05$26.00 million$15.76 million
Chart Industries stock logo
GTLS
Chart Industries
4/28/2023$0.36$1.41$1.05$495.89 million$537.90 million    
uniQure stock logo
QURE
uniQure
2/27/2023($0.89)$0.15$1.04$55.37 million$102.75 million
W.W. Grainger stock logo
GWW
W.W. Grainger
4/27/2023$8.57$9.61$1.04$4.08 billion$4.09 billion    
Meritage Homes stock logo
MTH
Meritage Homes
4/26/2023$2.51$3.54$1.03$1.03 billion$1.28 billion    
Thryv stock logo
THRY
Thryv
2/23/2023$0.48$1.51$1.03$261.77 million$279.37 million
Valero Energy stock logo
VLO
Valero Energy
4/27/2023$7.24$8.27$1.03$37.88 billion$36.44 billion    
Deere & Company stock logo
DE
Deere & Company
2/17/2023$5.53$6.55$1.02$11.14 billion$11.40 billion    
DISH Network stock logo
DISH
DISH Network
2/23/2023$0.47$1.47$1.00$4.15 billion$4.04 billion    
TransDigm Group stock logo
TDG
TransDigm Group
5/9/2023$4.98$5.98$1.00$1.53 billion$1.59 billion    
Universal Insurance stock logo
UVE
Universal Insurance
2/23/2023($0.28)$0.72$1.00$319.59 million$330.36 million
Westlake stock logo
WLK
Westlake
5/4/2023$2.05$3.05$1.00$3.41 billion$3.36 billion      

Key Points

  • An earnings surprise is defined as higher or lower revenue and/or earnings reported by a company in its earnings report.
  • Earnings surprises can come in four varieties, each with their own meaning for investors.
  • The revenue and earnings forecasts that analysts provide correlate to their overall rating for a stock.
  • Investors should look at the track record of an analyst when assigning a meaning to their revenue and earnings forecasts. 
  • 5 stocks we like better than Coca-Cola
What is an Earnings Surprise?

An earnings surprise occurs when a company posts revenue and/or earnings per share or profit that is higher (beat) or lower (miss) than what the analysts that follow the company predict. 

When the earnings beat or miss is significant, it will likely have an impact on the company’s stock price. This price movement can be temporary or it can be a continuation of a trend in place before the company reported earnings. In this article, we’ll take a closer look at earnings surprises, including some of the popular forecasting models that analysts use to estimate the value of a company. 

Overview of Earnings Surprises

Earnings season is a time when a company’s stock price can make outsized movements and an earnings report is like a report card for investors. The Securities and Exchange Commission (SEC) requires every publicly traded company to deliver an earnings report to shareholders on a regular basis, usually quarterly.

This report covers a range of issues that affect business operations. In the financial press, it boils down to the company’s revenue (the top line) and earnings per share, or profit (the bottom line).

Analysts spend extensive time researching a company and cover this type of data. They speak with management, visit facilities and pay attention to macroeconomic conditions that could affect the sector in which that company operates. From there, the analysts post expectations for the company’s revenue and earnings per share for the upcoming period. 

On many occasions, a company reports higher or lower earnings than what analysts expect. These are known as earnings surprises and they can occur on the upside (an earnings beat) or the downside (an earnings miss). 

MarketBeat offers subscribers the MarketBeat earnings screener which could also be used as an earnings surprise screener. That’s because the screener allows you to search for a company’s earnings results based on specific criteria such as whether its earnings per share (EPS) estimate came in higher or lower than the consensus estimate of analysts. 

The next section provides more details about different earnings surprises that investors can expect.  

Breaking Down Earnings Surprises

In addition to providing the raw numbers, companies use their earnings reports as a way to provide guidance about upcoming quarters or the entire year. As a free service, you can find the latest earnings reports from MarketBeat by looking under the tab called “earnings calendar.” 

Don’t forget to review the earnings transcript of the company’s conference call. What are earnings transcripts? They are audio recordings and/or written transcriptions of everything that a company says to analysts and investors after they report earnings. 

Pay close attention to what company management says to understand how it may affect your investment decisions. MarketBeat has a tool that can help you read or listen to many transcripts. MarketBeat also provides tools to help you learn more about earnings guidance data.

There are four types of earnings surprises: a double beat, a double miss, a “beat on revenue but a miss on earnings” and a “miss on revenue but a beat on earnings.” 

The Double Beat

The “double beat” is the most bullish of all outcomes. This means that for the quarter just ended, the company sold more than analysts expected. More importantly, it generated a higher profit. This could mean that its products had a higher profit margin or it could mean that the company has an efficient cost structure that allows more revenue to go to the bottom line. 

In either case, it’s considered bullish for the stock, so you can weigh this against the company’s future guidance. A company may issue a warning that while it beats on revenue and earnings in the current quarter, that trend will not likely continue. In this case, the company’s stock could drop in value. However, if that forward guidance suggests that revenue and earnings will continue to grow, the stock could move much higher.

The Double Miss

Not surprisingly, the “double miss” is the most bearish of all outcomes. This means that the company generated less revenue and profit than the analysts expected. If this is followed by negative guidance, you may want to sell your stock. On the other hand, if the miss was caused by conditions largely outside of the company’s control, you may decide to hang on to the stock, particularly if the company pays a dividend. 

For example, at the onset of the COVID-19 pandemic, many companies saw their stock prices plunge. In the initial quarters, many delivered lower revenue and earnings than forecasted. However, when companies quickly reversed, prudent investors made substantial gains.

Beat on Revenue, Miss on Earnings

A “beat on revenue, miss on earnings” is generally seen as bearish. When a company increases its sales but doesn’t generate as much profit as in prior quarters, it suggests some kind of negative pricing imbalance. In many cases, it signals that the company does not have the pricing power to pass along increasing producer costs to its customers. If the company operates in a highly cyclical sector, this may weigh on the stock for several quarters and may encourage you to sell your shares. 

Beat on Earnings, Miss on Revenue

Conversely, a “beat on earnings, miss on revenue” is seen as neutral to slightly bullish. Obviously, it’s not great for a company to sell fewer products. If the numbers beat profit expectations, it can suggest that the company has a high profit margin and that its customers will pay that premium to own the products. If investors believe that the situation will continue for several quarters, it may be time to buy shares even though the stock may go higher after earnings. 

Earnings Surprises and Analyst Estimates

Let’s take a look at what analysts typically recommend for individual stocks:

  • “Strong buy” or “buy” recommendation: This means that the analyst has made a recommendation for investors to buy a particular stock or security. You can expect a company to beat analysts’ recommendations.
  • “Strong sell” or “sell” recommendation: This means that an analyst has made a recommendation for investors to sell or liquidate their position in a particular stock or security. In this scenario, the revenue and profit estimates already price in this sentiment.
  • “Neutral” or “hold” recommendations: This means analysts have not called for specific buy or sell action. Rather, they give their opinion on the performance of the stock. This rating is given when an analyst expects the stock to perform in a way consistent with the performance of the broader market, or with comparable companies within the analyst’s sector of expertise. This rating could cause the biggest upside or downside from earnings surprises.

In recent years, many analysts have started to add clarity to the expected movement of their stock forecasts using two additional categories:

  • “Underperform” rating: This means the expectation for the stock will perform below the market or sector average. Analysts may use ratings such as "moderate sell,” “weak hold" or “underweight” in place of “underperform.”
  • “Outperform” rating: This is the opposite of an “underperform” rating. Stocks that receive this rating should outperform the market or sector average. Analysts may also substitute words like “moderate buy,” “accumulate” or “overweight.”

As we noted earlier, analysts take the information they receive from company executives as well as their own boots-on-the-ground research to determine a company’s valuation and to determine the economic value of a business.

If you have a background or interest in finance, you may want to look at a company’s balance sheet and do your own calculations. For example, a company’s price-to-earnings (P/E) ratio can be a clue as to whether you should buy a stock. What is price-to-earnings ratio, exactly? That’s when you can rely on the calculations provided by analysts. Here’s a look at some of the more popular valuation models. 

Market Capitalization

You can calculate a company’s market capitalization (or market cap) by multiplying the company’s share price by the total number of shares outstanding. 

For example, on November 7, 2022, The Coca-Cola Company (NYSE: KO) had a share price of $59.45 and 4,324,513,000 shares outstanding. The company’s market cap is determined by the formula 59.45 x 4,324,513,000 to arrive at the company’s market cap of just over $257 billion.

Times Revenue Method

This method assigns a multiplier to a company’s revenues generated over a period of time. The multiplier takes into account the company’s industry and current economic conditions. Tech companies typically have larger multiples than, say, utility companies. 

Earnings Multiplier

This method is similar to the times revenue method but puts the multiplier on earnings instead of revenue. Earnings tend to be a more accurate indicator of a company’s future success than revenue. The earnings multiplier is assigned to a company’s future cash flow that could be invested at the current interest rate over a specified period of time (usually 12 months). 

Discounted Cash Flow (DCF) Method

The discounted cash flow method, a commonly used model, looks similar to the earnings valuation model in that it seeks to project future cash flows to the current market value of the company. This model takes inflation into account. 

Book Value

A company’s book value measures the value of the equity that shareholders have in a company. Book value, shown on a company’s balance sheet, subtracts a company’s total liabilities from its total assets. 

How Much Weight Should Investors Give to Earnings Surprises

The answer to this question depends on what you believe about the accuracy of the earnings estimates. First, consider the accuracy of the information offered by the company. It has become increasingly common for companies to deliver preemptive earnings announcements. 

In the best-case scenario, you may consider it a step toward transparency. On the other hand, analysts can lower expectations that the company can then beat. 

Another factor is analyst objectivity. Prior to the dot-com crash of 2000, brokerage houses and other firms received “soft money” as compensation which led analysts to provide research and issue better ratings than a company would have otherwise merited. One regulation that has emerged since the dot-com crash requires analysts to use commonly accepted valuation techniques in their analysis, such as the factors listed above. This ensures that the methodology they use to assign a value to the company follows generally accepted accounting principles (GAAP). 

However, a more fundamental reason for analysts to be as accurate as possible is their own credibility and that of their firm. To that end, MarketBeat provides an analyst rankings tool that displays the average return on investment (ROI) for every analyst that made a “buy” or “strong buy” recommendation. Investors can sort results by country, sector and market cap. 

Use Earnings Surprises to Your Advantage

An earnings surprise occurs when the revenue and/or profit that a company reports exceeds or falls short of analysts’ estimates. When this occurs, it usually has a proportionate effect on a company’s stock price. That means the larger the beat or miss, the higher or lower the stock price can move.

Analysts use the information they have gathered from closely following the companies to provide investors with accurate revenue and earnings estimates. For a variety of reasons, their numbers may understate or overstate a company’s actual results. 

Use these estimates as a guide and prepare yourself to rethink your own ideas about the company if the earnings report delivers results that contradict your reasons for taking a long or short position in a stock. 

More Earnings Resources from MarketBeat

My Account -