Moreover, analysts have been persistently overoptimistic for the past 25 years, with estimates ranging from 10 to 12 percent a year, compared with actual earnings growth of 6 percent. Over this time frame, actual earnings growth surpassed forecasts in only two instances, both during the earnings recovery following a recession (Exhibit 2). On average, analysts’ forecasts have been almost 100 percent too high.
Monday, July 19, 2010
Should You Believe Equity Analysts' Forecasts?
Analysis from McKinsey indicates analysts (like almost everyone else) tend to be overoptimistic:
Subscribe to: Post Comments (Atom)
Post a Comment