NIRI gets First Call to drop its 'consensus' estimates

VIENNA, VA: Financial-information giant Thomson Financial, which owns First Call, the primary collector of Wall St. analysts' earnings-per-share (EPS) estimates for public companies, will no longer use the term "consensus" estimate to describe the average analyst estimate.

VIENNA, VA: Financial-information giant Thomson Financial, which owns First Call, the primary collector of Wall St. analysts' earnings-per-share (EPS) estimates for public companies, will no longer use the term "consensus" estimate to describe the average analyst estimate.

The move comes on the heels of NIRI's effort to have First Call abandon the use of the phrase, which the trade group felt was misleading. First Call will now use the words, "mean" or "median" when appropriate. First Call has been using "consensus" estimate for years, and the term has slipped into the business press' vernacular.

"The decision to modify the First Call nomenclature was partially in direct response to requests from [NIRI president and CEO] Lou Thompson on behalf of NIRI members to add clarity to how First Call calculations are interpreted," said Chuck Hill, director of research at First Call.

"We applaud this decision by Thomson Financial," said Thompson. "Hopefully, it will diminish the securities market's and the media's focus on 'the number.'" He added that the term "consensus" implies that analysts had come to an agreement on a specific EPS number.

According to Hill, the term "median" will only be used on future five-year average annual secular EPS growth rates.

In a related survey recently published by NIRI, 77% of respondents said that their companies provide some sort of so-called earnings guidance, meaning that these companies provide a public prediction of what their earnings per share might be in coming financial quarters. Several large companies have stepped away from the practice in recent years, including Coca-Cola Company.

Of those respondents providing earnings guidance, 78% said that they were not considering discontinuing the practice, while 19% replied that they were. The survey was conducted November 24 to December 8, 2003, and included responses from 686 of NIRI's 4,600 members.

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