This is a confidence tool suggesting that the higher number of analysts making projections, the more accurate those estimates will be. Secondly, it lets you know how much of the stock is owned by institutions. The software also uses real-time past, present and projected yearly and quarterly earnings when determining a fair value. As general rules of thumb, most analysts determine how fast a company is expected to grow and then multiplies this growth rate by the actual estimate per share. The example given is a basic earnings model, but gives investors an idea of how it works.
Quarterly growth is also important to follow to assure the company meets yearly expectations.
A shortfall of analysts' expectations usually results in an analyst revision or downgrade and stock depreciation. On a side note, the markets as a whole are valued higher than previous years, so many companies will be trading well above their growth rate. This is why technical analysis is so important to incorporate into stock analysis. The Instant Analyst software is first web tool that uses the tried and true tools of the top market professionals to determine a stock's outlook and explain it in simple, clear terms. In addition, the technical terms are backed by a full glossary.