Definition of Earnings Blowout

What is the definition of an "earnings blowout?" What constitutes "blowing out earnings"?

Simply put - an earnings blowout occurs when a company significantly beats earnings expectations.

Analysts publish their earnings expectations for a company before quarterly earnings are announced.

Earnings expectations from all of the analysts who are currently following a company are added together and averaged out, creating a "consensus earnings estimate".

If the earnings number ends up being much higher than the consensus estimate, then this constitutes an "earnings blowout".

Example:

Analysts expect, on average, that XYZ will post earnings of 43 cents per share for their upcoming quarter (Q4).

XYZ ends up posting a number of 64 cents per share, easily besting even the most optimistic of estimates.

This would certainly constitute an "earnings blowout".


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