Earnings surprise
Also called EPS estimate, Consensus, Beat or miss.
How far the reported quarter landed from what analysts had pencilled in.
Surprise % = (actual EPS - consensus EPS) / |consensus EPS|
Consensus = the average of published analyst estimatesWhat it means
Before a company reports, the analysts covering it publish estimates and the average becomes the consensus. When the figures arrive, the gap between what was expected and what happened is the surprise, and it is usually what moves the share price on the day — not the profit itself, but the distance from what was already priced in.
A pattern of small beats is common and partly manufactured: companies guide expectations to a level they are confident of clearing. What is informative is the change in the pattern, not the pattern itself.
Worked example
Consensus earnings per share of $5.70 against $6.00 actually reported.
- 16.00 - 5.70 = 0.30 of surprise.
- 20.30 / 5.70 = 0.0526.
A 5.3% beat.
Every example in this glossary describes the same imaginary company, so the figures join up as you move between metrics.
How investors read it
- A beat on earnings with a miss on revenue is cost control, not demand, and the market usually reads it that way.
- The reaction matters more than the number. A stock falling on a beat means expectations ran ahead of the published consensus.
- Thinly covered companies have a consensus of two or three estimates, which is an average of very little.
Where it misleads
- Consensus figures are compiled differently by different providers and are revised right up to the report, so the same quarter can be a beat on one source and a miss on another.
- Companies guide analysts, so the bar is not independent of the company clearing it.
- Adjusted earnings are usually what gets compared, and what is adjusted out is the company's choice.
How Materiality uses it
Shown on the Earnings tab against the reported quarter, and the average recent surprise carries 15% of the scorecard's Momentum category. It is the one input here that does not come from the filings: consensus estimates are a market data feed, not an SEC document, which is also why the data audits — which run keylessly against EDGAR — cannot cover this metric or forward P/E, and say so rather than leaving it assumed.
The full methodology covers where the figures come from, how the statements are normalised, and what is deliberately left unadjusted.
Related metrics
A metric on its own is a number without a business attached to it. Materialitycomputes these from a company's own SEC filings, several years of them at once, and explains what the pattern means rather than leaving you to hold fifteen definitions in your head.