What is EPS Surprise?
The percentage difference between reported earnings and analyst expectations.
Think of it like this
Like a student getting a 95% on a test when everyone expected an 80% - the surprise matters as much as the grade.
Formula
Surprise % = (Actual EPS - Estimated EPS) ÷ |Estimated EPS| × 100- Actual EPS: Reported earnings per share
- Estimated EPS: Average analyst estimate
- Surprise: Positive = beat, Negative = miss
Why it matters
- Stocks often move sharply on surprises
- Consistent beats suggest management skill
- Misses can trigger significant selling
- Sets expectations for future guidance
What's a good value?
> 10%
Big Beat
Strongly exceeded expectations
2-10%
Beat
Modest outperformance
-2% to 2%
In Line
Met expectations
< -2%
Miss
Disappointed investors
Real-world example
A 15% earnings surprise often leads to stock jumps of 5-15% on earnings day.
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