A Novel Approach to Earnings per Share Pro Forma Forecasting

This inquiry explores the importance of accurate earnings forecasts for publicly traded companies in achieving investment success, particularly underscoring its significance in markets with limited analyst coverage, such as emerging markets like Poland. Statistical and machine learning models were not able to beat the naïve seasonal random walk approach in Poland according to various studies. Hence, this new approach which was never seen in the literature earlier, is presented. The study evaluates the accuracy of predictions generated through a proprietary pro forma forecasting model, a method employed to assess the potential outcomes of a company's business decisions, compared to the seasonal random walk model. It emulates the way financial analysts forecast as an optimization problem.