According to recent analysis, it is common for publicly traded companies to surpass analysts’ sales and earnings estimates during earnings season, with a 70% beat rate. While short-term swings in stock price due to earnings surprises should be taken with caution, over the long run, rising estimates are associated with higher stock prices. The consumer-discretionary sector of the S&P 500 has performed well this year, with Amazon.com Inc. and Tesla Inc. having the highest market capitalization within the sector. Despite a strong stock performance, the recent price cuts on Tesla’s electric vehicles caused its share price to decline, leading to a drop in consensus sales and earnings-per-share estimates.
This trend of negative performance is reflected in the industry data, with two home builders, D.R. Horton Inc. and PulteGroup Inc., being the top performers among companies showing the fastest expected sales growth through 2025. Tesla is still expected to show the highest rate of revenue growth in the sector through 2025, despite the recent decline in its consensus sales estimate for 2024. Analysts’ opinions regarding these companies suggest that Tesla is fairly valued, Amazon has the highest percentage of buy ratings, and Las Vegas Sands Corp. has the most aggressive consensus price target.
With these insights, it is clear how analysts’ consensus estimates can correlate to the movement of a company’s stock price, providing valuable information for investors looking to make informed decisions. This data highlights the importance of keeping track of consensus estimates for publicly traded companies, providing a deeper understanding of current market conditions and trends in specific sectors. For investors, it’s crucial to use these insights as part of a comprehensive approach to evaluate investment opportunities.
