07
Oct
10

Amazing how all these company earnings always manage to ‘beat estimates’

Alcoa’s 3rd Quarter Income was down 21 Percent but still managed to beat “Analyst Estimates”.  Change the number and the company name and it’s a headline template we can expect to see the entire season.

http://finance.yahoo.com/news/Alcoa-3Q-income-dips-21-apf-4225995303.html?x=0

http://www.cnbc.com/id/39556949 – CNBC describes Alcoa of ‘easily beating expectations’.

Looks like another amazing quarter until you consider that these so-called analysts recently lowered their estimates.

In this instance, the eps three months ago was .17, lowered to around .05, while the actual income came in at 6 cents a share – though some outlets are reporting it as 9 cents per share if one excludes “one-time items”.

In some cases, estimates were slashed as recently as yesterday – by half.

http://www.benzinga.com/analyst-ratings/analyst-color/10/10/511449/dahlman-lowers-estimates-ahead-of-alcoas-earnings

BUY BUY BUY!!!

This isn’t the only company where this game is played either.

http://www.bloomberg.com/news/2010-10-03/s-p-500-profits-cut-for-first-time-in-year-in-analyst-forecasts.html

Of course, the surest way to beat expectations is to set low enough standards ahead of time.

The big question is: do people really fall for these tricks of gaming estimates quarter after quarter and year after year? And if so, who? What really goes on in their brains. I have a bunch of crap in my basement I’d love to offload and
they’d probably make a great market for it.

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