Glossary / Fundamentals

Earnings surprise

Also called: earnings beat · earnings miss

An earnings surprise is the difference between a company's reported result and the consensus analyst estimate for that period. Reporting above the estimate is conventionally called a beat, reporting below it a miss.

How it is measured

How is earnings surprise measured?

Subtract the consensus estimate from the reported figure, usually on earnings per share and often on revenue as well. Consensus is a compiled average of individual analyst estimates, so it moves as analysts revise, and the same result can be a beat against one vendor's compilation and in line with another's.

Why it matters

Why does earnings surprise matter to a swing trader?

The measurement is a comparison against expectations, not against the prior period, which is why it is possible to report lower profit than last year and still register a beat. For a swing trader the practical point is that the price reaction frequently tracks the forward guidance issued alongside the result rather than the headline number, and that the reaction is concentrated in the sessions immediately around the report — which is why earnings dates are worth knowing before a multi-day holding period, in either direction.

Related

See this in the product

The earnings calendar · Full methodology

Related terms

EPS growth
Earnings per share is net income divided by the number of shares outstanding, and EPS growth is the change in that figure between two reported periods.
Revenue growth
Revenue growth is the change in a company's reported sales between two periods, expressed as a rate.
Volatility
Volatility measures how much a security's price varies around its own average over a period.
Gap
A gap is a discontinuity between one session's closing price and the next session's opening price, where the market reopens at a level with no trading in between.

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General information about market vocabulary, written to be descriptive rather than prescriptive. Not investment advice — see the risk disclosure.