SHARETIPSINFO >> Articles Directory >>Consensus rating

The estimates of a stock can be expressed in terms of consensus rating. An average can be taken from the different estimates made by different analysts on a specific stock. This is also known as consensus estimate. To make it clearer, if the analysts are estimating the earnings of a company for the coming year in terms of per share value as $3, $3.20, $2.70 and then consensus rating will be the simple average obtained as $2.97. The earning calculated this way per share can influence the market value of the share.

Consensus rating can be built using the Listing Picker page. The bids of lenders who have high estimated ROIs mainly take part in the estimation of the consensus rating. The listings bid by the above said lenders are identified to evaluate the consensus rating. If there is large number of lenders with attractive value for ROI, the consensus rating will be high.

The method of evaluating the consensus rating using the tool is not that advisable. The methods used by different brokers can be different for rating. Then there should be a single entity for evaluating the ratings. The I/B/E/S standard is used for getting a better recommendation. The recommendation received from the analysts is mapped to this standard of rating. The standard will calculate a consensus rating value through a numeric value assigned to the broker text. This consensus rating will be the average of the values given by all analysts.

We can compare the methods used to evaluate the on the job performance using tools. The mechanically derived method and the conservative method of using conservative method to rate the job performance will not find a great difference. Both these methods came with certain results and it was shown that both the results never showed a great variation. The percentage of impact as shown from the results appeared to be identical.

Consensus rating is made on a single entity. The standard used for making the evaluations from different brokers standardized to a common factor is the I/B/E/S standard. Here a numeric value is being assigned to strong buy, buy, hold, underperform and sell. Every financial site will have consensus rating. The average of the values is taken based on the financial consideration and information to make the consensus rating.

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