Do We Have a Consensus? An Analysis of Analyst Estimates

The primary job of Wall Street equity research analysts is to make stock recommendations, with estimates of company financial performance and future earnings as key inputs to such recommendations. This statistical investigation into the predictive power of equity research analyst estimates is intended to assess the overall accuracy of consensus estimates through weighted relative error averages. Conclusions are drawn based on the effect of various factors on overall estimate accuracy by segmenting the dataset into market sector, company size, number of analysts, and comparing to the predictive strength of historical compound annual growth rates.