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.