What it means
An earnings surprise is the difference between a company's reported earnings and the consensus analyst estimate. Beats are positive surprises; misses are negative. The surprise often matters more than the absolute number.
Why it matters
Stock prices reflect expectations. A company can grow earnings 20% and fall 10% if expectations were 25%. Trading earnings is trading the gap between actual and expected, not the actual.
How to use it
Watch the whisper number (buy-side estimate) more than the published consensus. Forward guidance often matters more than the past quarter's print.
Take it further
Want a worked example or a deeper dive? Ask Rocky how this concept applies to your specific watchlist or trade idea.
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