Earnings surprise

An earnings surprise occurs when the reported profit or loss of a publicly-held company is outside of the range of expectations of analysts. There is usually a small group of analysts that follows each of the larger public companies, and they formulate and publicize an expected earnings figure for these companies. When the reported earnings level is higher than the expected figure, investors are more likely to bid up the price of a company's stock. When the reported earnings level is lower than the expected figure, there is usually a sell off that reduces the price of its stock.

Related Courses

Investor Relations Guidebook 
Public Company Accounting and Finance