Analysts and the rest of the Wall Street community spend a lot of time eagerly waiting for reports and financial information with the same eagerness your local Comic-Con goers await the newest Star Wars trailer. And both sci-fi junkies and analysts have lots of expectations. The sci-fi fans might expect the latest special effects, while money guys might expect that companies will post certain earnings or reach certain benchmarks on other metrics. These Wall Street predictions are known as "analyst expectations."
Analyst expectations are also known as "Street Numbers," or sometimes, collectively, as the "consensus estimate." These figures represent the numbers that money folks think a company will post for their quarterly earnings or other estimates—before said company actually posts the numbers.
Example: Let's say Cisco has told the Wall Street analysts (employees who work for brokerage houses to provide "expert" advice to investors) that it expects to earn 40-45 cents a share on $10.5-11 billion in revenues. One analyst publishes that they expect 43 cents on $10.652 billion; another analyst publishes that they expect 40 cents on $11.1 billion, etc. These individual estimates are then compiled into a consensus estimate that's used to judge the final result. When you see headlines like "Cisco Beats Expectations With Earnings Report" these are the estimates being referenced. See Whisper Number, Buy Side, and Sell Side for more gory details.
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Finance: What Does a Financial Analyst D...320 Views
what does a financial analyst do? well this and this and this.
so after all that analyzing of financial data what does the analyst actually do?
well she makes recommendations to you know do stuff. generally so that [man frowns at camera]
investors can make money or not lose money. and to be clear financial analysts
come in a few different flavors. pick an analyst who works for a stock brokerage
for example. well they produce reports which the brokerage then gives to
clients hoping that it will incentivize its clients to trade with the firm and
give the firm its business, which of course generates commission for the
stock brokers in theory. the goal here is to make money for the client. but the
more near-term goal is to you know get the client to pay attention to the firm.
this is a subtle but very important difference from a financial analyst who [one man stands behind another and shouts]
works for an investment company ie one who actually invests money for clients
and is evaluated based on the performance of those investments. a
financial analyst inside of an investment company like fidelity or
Franklin or American Funds cares only about how well the investment does. the
financial analyst does not have to juggle clients or worry about marketing
to non-professional investors or generating commissions for the firm. all
they have to worry about is beating the market or their index or whatever
benchmarks are set out there for them .in addition there are two flavors of [woman hits punching bag]
financial analysts on Wall Street more or less .by side -those are extensions of
hedge funds and private equity funds and venture capital funds and mutual funds-
they're all the people who analyze things from the perspective of a buyer
only like they buy the stuff they don't have to keep clients happy and get
Commission business. then you have the sell side which are largely just [graph showing stocks]
extensions of stockbrokers. stockbrokers hire the analyst to give smart opinions
on buying selling and holding stocks such that well they can go talk to their
clients about it and win Commission business from getting them to trade
through them by recommending Microsoft at forty two dollars and twelve cents
and stuff like that. there are financial analysts who work for the government as
well. these guys are usually housed in hell-like divisions of the government
called the Fed which assesses whether or not the [man in dark glasses behind computer]
economy is heating up cooling down or see-sawing like a spring day in Chicago.
well here a financial analyst might be sampling the prices of a half gallon
carton of GMO milk at 500 grocery stores around the country. they then use that
data to figure out if the country is feeling inflation deflation or just
boredom .financial analysts exist inside of corporations as well.
corporate analysts perform market evaluations to try to help companies [man smiles at camera]
sell more product for more profit which in turn fuels the company's growth and
all that other fun stuff. so yes being a financial analyst might not be the
flashiest job in the world but just think about all that Ben and Jerry's you
can buy once your commission comes through. [people cheer the ice cream truck]
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