Street Expectation

See: Whisper Number.

Boeing said earnings would be “over $2” next quarter. But Street expectations were way higher than that number. More like 3 bucks, even 3 and a quarter.

How do you know what Street expectations are? Well, if the stock is trading at some astronomical multiple, then, um, Street Expectations are high. What’s astronomical? Well, for a company like Boeing, which grows at meh rates (i.e. rates about the same as where the overall market grows), then it might trade at a modest premium to the market. Like...if the S&P trades at 20x earnings, and Boeing trades at 23x, then maybe Street expectations are in line. If it trades at 30x, then obviously Street Expectations are a lot higher than the earnings expectations that are published.

That is, at $160 on $8 a share of trailing earnings, BA trades at 20x. At $320, it trades at 40x. This multiple is broadcasting that the Street really believes that BA will earn more like $16 than $8.

See: Whisper Number.