Investor Glossary-consensus recommendationInvestor Glossary-consensus recommendationInvestor Glossary-consensus recommendationInvestor Glossary-consensus recommendationInsightful stock market charts - Click here
investor
Categories    # A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

Consensus Recommendation

The HTML to link to this page
 

The consensus recommendation is an average of analyst ratings on a stock. Suppose five security analysts follow Acme stock; two say "buy", one says "hold"; two say "sell". To compute a consensus recommendation, each rating is assigned a value, e.g., a buy is a 5; a hold, 3; a sell, 1. The consensus recommendation is the average rating, weighted by number of analysts: [(2 X 5)+(1 X 3)+(2 X1)]/5. Thus the consensus recommendation is a 3, or hold. Like any weighted average, the consensus recommendation has its pluses and minuses. The consensus recommendation does give you a quick idea of what Wall Street pros think of the stock. But the consensus recommendation can also conceal wide differences of opinion among analysts: in the example, note that the consensus recommendation (hold) was the rating of the fewest analysts. In addition, the methodology of a consensus recommendation is open to scrutiny. For example, it's questionable whether the ratings of the best analysts should receive the same weight as those of analysts held in less esteem.



Rate this consensus recommendation definition...

Learn about investing with the Investor Glossary Term of the Day


Click here for insightful stock market charts. Where is the market headed? The answer may surprise you. Find out
with the exclusive & Barron's recommended charts of Chart of the Day.


Popular Terms: quality assurance, minority interest, command economy, Zero Cost Collar, APR, annual return, Key Rate Duration, average price per share, ex-dividend date, phantom income, risk management, in escrow, EBITDA, diluted share, option premium, cancelled check, covered put, required rate of return, labor relations, VIX, balance sheet, current ratio, LIBOR, real GDP, 401a, debt service coverage, 1031 exchange, margin rate, 144a, liquidity ratio, class C shares, wholly-owned subsidiary, deferred tax, irrevocable trust, 1035 exchange, stock market close, deferred revenue, implied volatility, reverse mortgage, retained earnings, dividends payable, inflation, stock split, open position, limit order, ex-dividend, FICO score, FTSE, per diem


Accounting | Banking | Bonds | Brokers | Economy | Futures | Mutual Funds | Options | Real Estate | Retirement | Stocks | Taxes | Technical Analysis
Home | Term of the Day | Suggest a Term | Chart of the Day | Dogs of the Dow
©2004-2016 Investor Glossary - All rights reserved - Terms of Use