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Strategies & Market Trends : Value Investing

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From: Marco Vincenzo	1/21/2026 1:01:17 PM
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Hello everyone, I got a question. When we see analysts' earnings forecast for a firm, are we seeing the earnings forecast as the required rate of return or are they implementing satisfactory residual earnings levels to it also? Or is it totally independent from those two factors? Because if it is, then if the forecasts were below the cost of capital and the firm end up beating those forecasts, they could be simply earning the cost of capital without adding value to the firm, which even though is beating forecasts, it could be positive from what analysts expected but when it comes to the firm's performance it is not, right? Best, Marco.

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