What It Takes To Beat The Street
October 25, 2009 by Tisa Silver
Filed under Finance
According to the Associated Press, over 80 percent of companies that reported third quarter earnings in October 2009 beat Wall Street’s expectations.
Photo by epicharmus, courtesy of flickr
Is business booming or what?
I’m leaning to the “or what” side.
Things are definitely better than they were around this time last year, but the number of companies beating the street’s estimates is uncanny. Makes you wonder how the expectations are formed.
Ultimately, they are generated from within the company and companies know that investors don’t like to be disappointed.
Earnings surprises, good and bad, often offer a bounce or bust, but if you invest on news of such surprises and the market has overreacted you could be in for a surprise yourself: a loss.
Expectations aren’t everything, and executives know that it is better to aim low and overachieve rather than to aim high and miss. So, the next time a company beats the Street, be mindful of how much, or how little, is required in order for the company to do so.
