The Amazing Relationship Between the Estimize Consensus and Apple’s Guidance
- Posted by Leigh Drogen
- on July 23rd, 2012
We’ve been collecting Estimize community data on Apple now for 8 quarters, which includes previously published estimates from some Estimize community members before the platform went live in December of 2011. We recently took a look at this data in more detail and found some really amazing stuff. In short, not only is the Estimize consensus more accurate than Wall Street by a large margin, but there are some very regular relationships between Estimize, Wall Street, Apple’s guidance, what the company reports, and how the stock reacts.
Here are some interesting statistics that we found:
- The average difference between the Estimize EPS consensus and what Apple reports is 8.75% while the average distance between Wall Street and what Apple reports is 17.13%. The averages for Revenue are 4.74% and 8.80% respectively. This boils down to Estimize being far more accurate than Wall Street.
- Here’s where it gets interesting. The average distance between Apple’s guidance and the Estimize consensus for EPS and Revenue are 32.03% and 15.48% respectively.
- The average three day move in Apple’s stock after the report over the last 7 quarters has been 4.92% on an absolute basis.
- For FQ4 2011, the distance between the Estimize consensus and Apple’s guidance was a whopping 43.45% for EPS and 20.98% on Revenue. Apple missed those expectations and was down almost 7% three days later.
- For FQ1 2012, the tables flipped and the difference was only 12.37% for EPS and 6.48% for Revenue. Apple crushed it and was up 6.4% three days later.
So what does this tell us? Well, there is a very regular relationship between Apple’s guidance and the Estimize consensus which produces volatility when it gets out of whack. If you had these numbers ahead of time there was alpha to be captured.
So what does it look like this quarter? The relationship is actually right inline with the average, 31.91% above for EPS and 15.44% above for Revenue. That is counting over 225 estimates for the community this quarter. To me that says there will be very little volatility this quarter after Apple reports.
You can see the whole spreadsheet here.
Head over to Estimize and make your Apple estimate now.
Full Disclosure: Nothing on this site should ever be considered to be advice, research or an invitation to buy or sell any securities, please see the Disclaimer page for a full disclaimer.
blog comments powered by Disqus
Leigh Drogen is the founder and chief investment officer of Surfview Capital, LLC, a New York based investment management firm employing an intermediate term long/short momentum strategy. More »
- My 10 Stocks and Big Trends for 2014
- Please Just Stop Building These Apps
- Finance People Don’t Have Pseudonyms, and Other Musings On Identity In Social Finance
- Estimize Named 1 of Forbes 9 Hottest Startups of 2013
- Here’s How We Posted a 77.4% Gain With 2013 Picks and Trends
- Why You Are Completely Wrong About Forward Guidance Being More Important Than Results
- Estimize Featured In CNN Money’s Top 15 Financial Apps
- Why I Owe Mark Zuckerberg An Apology
- SunTrust Joins The Estimize Platform, All 299 Other Sell Side Firms to Follow
- The Real Problem With SigFig’s $10/Month Portfolio For Everyone
- December 2013
- November 2013
- October 2013
- September 2013
- August 2013
- July 2013
- June 2013
- May 2013
- April 2013
- March 2013
- February 2013
- January 2013
- December 2012
- November 2012
- October 2012
- September 2012
- August 2012
- July 2012
- June 2012
- May 2012
- April 2012
- March 2012
- February 2012
- January 2012
- December 2011
- November 2011
- October 2011
- September 2011
- August 2011
- July 2011
- June 2011
- May 2011
- April 2011
- March 2011
- February 2011
- January 2011