Expert: k kemper Date: 1/21/2005 Subject: Earnings reports
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Followup To
Question -
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Followup To
Question -
When a company misses the earnings estimate of "the street", why is the estimate never questioned for accuracy?
Answer -
why r u supposing it is never questioned?
btw--a guess is for the future, an income statement
and balance sheet are for fact.
does that help?
Well, no. I agree with your answer but, for example, E-Bay is being hammered today for missing the estimate by a penny. I have never heard any of the talking heads on TV express any doubt as to the accuracy of the estimate, only the fact the company(s) missed it.
Answer -
there are 3 types of stock market investors;
long term 10+ yrs
intermediate who follow industries
daily for instant gains
if someone is buying and selling ebay on a daily basis
then these hints of tomorrow's book values, stock
values, etc., are of some value.
I studied that years ago and outsider's and even
insider's points re "will they reach their net profit
goals" have no meaning to anyone but--the inside
employees AND those who buy based on dividends.
MOST companies pay out dividends based on net profits.
does THAT help?
I'm not into stocks but follow the market only in the hope my mutual fund based IRA stays afloat. I can see where stock traders might use the information but my original question goes unanswered. Why are the estimates never questioned? Please excuse my persistance and single mindedness.
Answer why r u supposing it is never questioned?
u r not following. the PR firm of Ford motor company
says "we think the next quarter dividends will be
4 cents. [on common stock, category d, etc]
That is guessed because the company has their financials
in their hands.
NOW using your approach, the news journalist says
WHY ARE you saying this? why is it not 5 cents
or only 2 cents?
well, the company has the company's data from the
accountant/controllers. The math matrix SAYS
if we net this and we have this number of stockholders
with that class of stock, we will pay out so many
dollars and that divided by the amount being paid
out will equal 'u' cents.
IF THE news journalist Worked for the company or had
week to week data [which is not public information
until the company publishes is], the journalist
would have something to challenge.
so, the challenge must [to be viable] COME from a source
that knows more or as much as the company putting it
out does.
MAKE Sense yet?
[horse bookies work on the same premises except it
is all 100% guess work. they have no races inbetween
races to determine a horse's speed or how it feels, etc.]
