Earnings Beat and Miss

Definition

A company beats earnings expectations when it reports higher earnings than analysts expected. It misses when it reports lower earnings.

Headlines typically compare reported earnings per share with the average analyst estimate. A company can beat a low estimate even if profits fell from a year earlier. Investors may also react to sales, profit margins, or the company’s outlook when the results come out.

Example

Analysts expect Company A and Company B to each earn $2 per share. Company A reports $2.20 and beats expectations. Company B reports $1.80 and misses.