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What Is the Institutional Brokers' Estimate System (IBES)?
Let me explain what the Institutional Brokers' Estimate System, or IBES, really is. It's a database that brokers and active investors use to access estimates from stock analysts about the future earnings of publicly traded American companies. You'll often see it written as 'I/B/E/S.'
Key Takeaways
IBES acts as a database holding analyst estimates and company guidance for more than 23,400 public companies. It pulls together all available financial data on companies and sectors to help with decision-making. You get access to equity analyst consensus and forward guidance. Historical data starts from 1976 when IBES began, and international data goes back to 1987. Today, Thomson Reuters owns IBES.
Understanding IBES
IBES functions as a central hub for all current analyst estimates on stocks. It also includes company guidance, which are the projected future earnings that companies release quarterly and annually, updating them as necessary.
The database originated in 1976 from a brokerage firm, changed owners a few times, ended up with Primark, and then Thomson Reuters bought it in 2000.
It gathers summary information and detailed projections from analysts and brokers at major international brokerages and local independents. This covers performance measures across all industries, including estimates for revenue, earnings per share, price targets, net debt, enterprise value, and net income, among others.
You can break down the data by year, fiscal quarter, or other timeframes to measure and predict company performance.
The database also includes analyst recommendations on whether to buy, hold, or sell shares in the companies they cover.
Important Note
Remember, IBES is built to be a centralized system that assists in making decisions about securities.
How IBES Is Used
IBES aims to provide a concise, centralized system for aiding decisions on securities. It gives you access to a broader consensus estimate instead of relying on isolated judgments from daily analyst reports.
You can use IBES in various ways. For example, create forecast models for earnings per share using it as a benchmark. It's also applied in accounting research.
IBES Spinoffs
Thomson Reuters has developed other databases based on IBES. For instance, IBES guidance data and earnings estimates are available to academics at the Wharton School for reviewing company expectations. There's also an IBES historical database for comparing and testing investment theories.
IBES is one of several databases used by money managers and investors. The Center for Research on Security Prices offers databases with daily and monthly market information, research, and historical data.
Advantages and Disadvantages of IBES
Let's look at the pros first. IBES aggregates earnings estimates from a wide range of sell-side analysts, including those from investment banks, brokerage firms, and other institutions. This covers various industries, sectors, and regions, giving you plenty of information for different purposes.
It consolidates these estimates into one database, saving you time as a centralized platform for forecasts and data. It provides stability and access to historical estimates and revisions.
IBES updates regularly with the latest estimates, so you get near-real-time information. It includes validation checks, data cleaning, and credential verification to ensure accuracy.
Now, the cons. IBES depends on estimates from sell-side analysts who might have biases or conflicts of interest, like maintaining relationships with companies or their employers. This can lead to overly optimistic or pessimistic data that doesn't reflect true fundamentals.
The methodologies analysts use aren't always transparent, making it hard to judge reliability. Even with checks, data can have errors.
Updates are regular, but there might be delays in reflecting revisions, which can be a problem in a competitive field. Also, coverage might be limited for smaller companies or niche industries, so you might not find what you need.
Pros
- Wide analyst coverage for diverse industries
- Simplifies research with centralized, standardized data
- Access to historical trends aids forecast evaluation
- Provides timely updates for informed decisions
- Ensures data accuracy through quality control
Cons
- Analyst biases influence forecast accuracy
- Lack of transparency in forecasting methodologies
- Estimates prone to errors and variability
- Potential delays in reflecting revisions
- Limited coverage for smaller companies, niche industries
What Does IBES Stand For?
In financial markets, IBES (or I/B/E/S) stands for Institutional Brokers' Estimate System, a database with equity analysts' estimates and reports on most publicly traded companies.
Who Owns IBES?
Thomson Reuters owns IBES, having acquired it in 2000 when they purchased Primark.
What Kind of Data Is Found in an IBES Report?
Besides analyst recommendations, IBES reports include company financial data like earnings per share forecasts, company guidance, and key performance indicators.
How Can I Access IBES Data?
You can access IBES through Thomson Reuters' subscription services, such as Refinitiv, Thomson ONE, and Eikon platforms.
The Bottom Line
IBES aggregates earnings estimates from sell-side analysts, offering comprehensive coverage across industries. It gives you timely access to consolidated and customizable data, helping with informed decisions and evaluating market expectations.
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