How to Calculate a Stock's Earnings Surprise

An earnings surprise compares the actual earnings per share to the consensus earnings estimate.

When a publicly traded company reports its quarterly earnings, one of the metrics that it provides is the earnings per share. Professional stock analysts provide their estimate for a company's earnings per share before the company reports earnings. The earnings surprise is a simple relationship between the reported earnings per share and the consensus, or average, of the professional analysts' estimated earnings per share. An earnings surprise can be in the form of a dollar amount or a percentage.

Step 1

Find the stock's consensus estimate per share for the quarter. You can find the consensus earnings estimate for a stock on a stock's quote page on free financial websites. Many brokerage websites also provide consensus earnings estimates for their clients.

Step 2

Find the stock's reported earnings per share. You can find the reported earnings per share by entering the stock's symbol in a financial site. Most companies also publish their earnings per share on the "Investor Relations" or "About Us" pages of their websites.

Step 3

Calculate the earnings surprise as a dollar amount by subtracting the consensus earnings estimate from the actual reported earnings. A positive earnings surprise occurs when the reported earnings per share is higher than the consensus earnings estimate. A negative earnings surprise occurs when the reported earnings per share is lower than the consensus earnings estimate.

Step 4

Calculate the earnings surprise as a percentage by first subtracting the consensus earnings estimate from the actual reported earnings and then dividing that number by the consensus earnings estimate.

Tip

Make sure to use the quarterly earnings per share estimate. Professional analysts also provide an annual earnings per share estimate which should not be used to calculate an earnings surprise.

Things You'll Need

  • Consensus earnings estimate for the stock

  • Actual reported earnings for the stock

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