It’s Not the End of the World
What to Do—and Not Do—When Faced with Missing the Consensus Earnings Estimate
In This Chapter
- Why a one-penny miss of the consensus is so deleterious.
- What factors determine investors’ reaction to companies’ results.
- Why high-growth companies that disappoint investors are hit hard.
- What actions managers can take to avoid a consensus miss, and its consequences.
- What course mitigates investors’ response to disappointments.
On June 26, 2007, the Kroger Company reported a 10 percent rise in first-quarter profits. The supermarket chain’s shares, however, fell 4.7 percent (the S&P 500 rose 0.6 percent).1 What gives? Kroger’s EPS, coming at $.47, missed the analysts’ consensus earnings estimate by a penny—the ...