What is the recommendation of consensus?

Consumption recommendations are basically a collection of analysts' evaluation for a given stock that were used to create an average recommendation of analysts. By identifying the key elements of each analyst recommendation, it is possible to determine the overall recommendation for shares. Consumption recommendations may indicate the action of possession of current shares, buying additional shares or sell all or part of the shares that are currently in hand. The type of recommended actions associated with individual recommendations carry a different value for each recommended action. For example, a purchase recommendation would often be identified as 5, while the recommendation for possession of current shares would deserve a value of 3. After identifying all recommendations, the number of values ​​and the sum are divided by numerial recommendations. The resulting figure will be a recommendation of consensus.

For example, assume that for a given supply is gathered in totalSix recommendations of shares analysts. Three indicate purchase while one urges the sale of shares and two recommend holding stocks. Using the previously listed scale scale, this would bring a sum of 22, which would then be divided by the number of recommendations collected, which is six. The final result is a consensual recommendation of 3.6, which is rounded to the nearest value of the numbers of the selection, or 3. The consensus recommendations is to hold shares for the time being.

It is important to realize that while the recommendations of consensus is a great way to achieve a wide view, it does not necessarily recommend the best solution for the investor. The criteria used by each analyst can know the Varies, resulting in different views based on a wide range of data. For this reason, the recommendation of consensus should be considered an indicator, but not the only data that the investor should consider in investment decisions.