Why is there no estimate for company X?

The estimates on our Stock Reports are based on the Consensus Estimate among available broker forecasts, as compiled by Thomson Reuters.

However, where this is no broker coverage, there will be no consensus estimate. This is often the case for smaller, less liquid companies that tend not to be covered by sell-side analysts. More heavily traded, large-cap companies generally attract greater sell-side analyst attention for three reasons:

  1. Large-caps are more likely to generate higher investment banking fees;
  2. Typically, greater liquidity translates into higher revenue from trading commissions; and
  3. Many buy-side funds are bound by market cap restrictions on portfolio holdings.

Consequently there is less incentive from a broker-dealer perspective to provide coverage for small and micro-cap companies. To some extent, this gap has been remedied by the rise of sponsored and independent research firms.

However, even where estimates are available, it's important to understand the limitations of estimates data (not least the potential conflicts of interests that are arguably inherent within investment banking).