Trade Like a Stock Market Wizard: How to Achieve Super Performance in Stocks in Any Market: How to Achieve Superperformance in Stocks in Any Market

by Mark Minervini

The game players may even underdeliver by dropping an earnings bomb in an effort to have the estimate bar temporarily lowered for easy comparisons in the future. One gimmick is to warn the public of a potential earnings problem, which will cause analysts to lower their earnings estimates. Then the company reports earnings that are better than the lowered estimate. This will result in an earnings surprise; however, it will be a surprise in the context of a lower consensus comparison. If you see that estimate revisions were recently lowered due to downside guidance, and then the company beat expectations, this should raise a red flag; the report may not be as good as it looks on the surface.