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Stock Analyst Accuracy – Why Ratings Can Be Wrong & When to Listen

By Joshua Rodriguez, MoneyCrashers

Money Crashers

APRIL 6, 2021
...The bottom line is that research analysts aren’t working for you. Who they work for can create biases that make their work unreliable at best; the average retail investor simply shouldn’t trust them...

Here are the stats analysts don’t want you to know, courtesy of FactSet.com:

  • Historic Performance: The majority of publicly traded companies listed on the S&P 500 beat analyst expectations when reporting financial results, and this percentage is growing quickly.
  • EPS Surprise: In the fourth quarter of 2020, 81% of companies listed on the S&P 500 reported a positive EPS surprise, meaning that these companies beat analyst expectations. That’s a huge miss on a key valuation metric used by most investors.
  • Revenue: In the fourth quarter of 2020, 79% of companies listed on the S&P 500 beat analyst expectations in terms of revenue.

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