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Analysts' Estimates

Analysts consensus earnings forecasts are the single most important factor influencing stock prices. Changes in consensus forecasts often precipitate major stock price moves. You can find analysts' forecasts on most major financial sites, but at this writing, Yahoo shows you more data than other sites, and displays all of the information on a single page, making it easier and faster to access. Consequently, I'll use Yahoo's format to explain how to use consensus forecasts.

Earnings Growth Forecasts

You would think that the consensus forecasts reflect sophisticated statistical processing of the analysts' raw forecasts. But in fact, consensus forecasts—the numbers that determine whether a company's stock moves up or down on report day—are simple averages of the individual forecasts.


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