Difference in expected earnings and normalized earnings. Companies with large earnings surprises can see positive or negative "jumps" in stock price. Companies with a much higher expected earnings can see favorable jumps in stock price immediately after announcement, conversely, stocks with lower earnings than expected can see stock prices fall.
We calculate earnings surprise as normalized EPS - expected earnings. Positive earnings surprise means for that quarter, the company beat expected earnings, whereas negative earnings surprise means that the company missed expected earnings. However do not assume that companies with a history of beating estimates are not guaranteed to continue doing so.
For example, Apple's first missed earnings came as of September 2011, even after a period of beating Wall Street earnings estimates.
Expected earnings are a consensus made by Wall Street analysts covering the stock. Our expected earnings come from S&P Global.
A company's normalized earnings are the company earnings for a period adjusted to not include exceptional one-time expenses or one-time influences.
Earnings Surprise = Normalized Diluted EPS - Expected Earnings.