To answer my own question, here’s how stocks can consistently “surprise on the upside”:
Proctor & Gamble, PS US, is a Dow Industrials component.
According to I/B/E/S, there are 17 analysts on Wall Street who actively cover the name.
For the September 2006 quarter (to be reported next week, on 10/31), the range of estimates is 76 to 79 cents per share, with consensus at 77.9 cents.
Even for a consumer products company, that’s a pretty narrow range, don’t you think?
And management’s own guidance? Between 76 and 78 cents — so The Street is expecting a result above the mid-point of management’s guidance. Pretty aggressive!
PG will do about $18bn in revenue in Q3, and maybe $2.8bn in net profit. Between the top line and the bottom line PG management has about seven jillion ways to manipulate reported earnings.
So…I am betting that PG, like a lot of listed companies, will beat earnings next week.
