Part 3 – Lesson 7
The most detailed sources for sell-side estimates are from paid subscriptions. Bloomberg, Factset, and Thomson are the premier data providers that compile earnings estimates for various financial metrics (revenue, EBITDA, operating income, EPS, cash flow, capex, etc). Additionally, some investment funds will pay for consensus financial models, where the data provider will go into the Excel financial models of several sell-side analysts and create averages for a number of the important financial and operating metrics.
For example, a firm that specializes in the creation of consensus models will take the Excel models for Verizon from each of the sell-side analysts and will be able to provide consensus gross post-paid additions, gross pre-paid additions, churn, net post-paid additions, net pre-paid additions, and so on. These consensus models calculate and present averages for very specific financial and operating metrics, which may not be available within Bloomberg, Factset, and Thomson.
However, if you are an individual investor, where can you find earnings estimates? Unfortunately, the resources are much more limited, but we will present below a few free resources that have basic estimates.
We will look up earnings estimates for GOOGL (performed July 2018) in Yahoo Finance. If you type in GOOGL into the ticker query bar, you will come to the below page:
The default screen will be the “Summary” tab. From here, you’ll need to click on the “Analysis” tab, shown below:
In the Analysis tab, Yahoo Finance shows the consensus EPS and revenue estimate for GOOGL for 3Q 2018, 4Q 2018, 2018, and 2019.
Let’s calculate the 2019 P/E ratio based on this consensus estimate. Yahoo Finance shows the 2019 consensus EPS as $48.06. Based on the $1252.89 price, the P/E ratio is 26.1x consensus 2019 EPS.
Another resource we’ve found is at www.nasdaq.com. If you search GOOGL in their ticker query bar (performed July 2018), you’ll come to the below page:
From here, you’ll need to click “Analyst Research.” On the next page, you’ll need to click “Forecast,” which will bring you to the below page:
The Nasdaq earnings estimates page only shows EPS, but it shows a few more years of projections vs. Yahoo Finance. Let’s calculate the P/E ratio for 2020 based on the 2020 EPS forecast shown on the Nasdaq website.
Using a stock price of $1252.89 and the 2020 consensus EPS of $59.76, GOOGL is trading at 21.0x based on 2020 EPS numbers.