Sales Forecasts
Although sometimes it may seem so, analysts just don't pull their earnings forecasts out of thin air. Rather, they set up detailed earnings models, starting with estimated sales, and then deduct their estimated costs to arrive at their earnings forecast.
Earnings forecasts have been available for years, but the sales (revenue) forecasts used to derive the forecasted earnings have been hard to come by. That changed in 2001 when Yahoo added consensus revenue estimates to its Research page report. The availability of sales forecasts is an important breakthrough that, so far, has gone unnoticed by many investors.
Consensus sales forecasts are most important when analyzing growth companies. Growth investors often don't realize that ...
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