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   What is the Analyst Revisions Model (ARM)?
 
   The Analyst Revisions Model (ARM) is a percentile (1-100) ranking of stocks based on changes in analyst sentiment, with 100 representing the highest rank.

ARM is highly predictive of relative price movement and is effective across stocks in each capitalization category, investment style, and market sector.

Although ARM is a proprietary model, you can observe the key drivers on a stock by looking at individual revision components.
  • Revision Components.
    For each stock, StarMine determines the three most relevant estimate measures to include in ARM. The first measure included is always StarMine's "Preferred Earnings" measure, which is EPS for most stocks. For more information on how StarMine determines the Preferred Earnings measure for a given security, please see "StarMine's concept of Preferred Earnings".

    The second measure is generally either EPS or EBITDA, depending on what was included as the Preferred Earnings measure; the third measure is always Revenue, where available, as it is widely followed and less correlated to the others.

    The Recommendations component is included for all securities for which recommendation data is available.

  • Input Variables.
    For estimate measures, the Mean Change incorporates the percentage change in the consensus estimate for each measure/fiscal period in each of the 7, 14, 30, 60, and 90-day change periods. For Recommendations, the Mean Change incorporates the difference in the consensus recommendation for each of the 30, 60, and 90-day change periods.

    The model also examines Predicted Surprise, the difference between StarMine's SmartEstimate and the mean estimate, for each estimate measure/fiscal period combination.
The Ranking boxes on a security's Ticker page display how the stock compares on each measure to all other stocks in the universe. The left-most box indicates that a stock is in the lowest 10 percent of stocks; the second box indicates a stock is in the 11-30th percentiles; the middle box corresponds to the middle 40 percentiles; the fourth box indicates a stock is in the 71-90th percentiles; the right-most box indicates that a stock is in the top 10 percent of stocks.

See also:
What is a SmartEstimate?


See glossary for: Predicted Surprise


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