Say you own the stock of a company whose earnings increased dramatically over the last quarter. Expecting a nice bump up in price, you see the stock price heading in the opposite direction.

What happened? How could good news suddenly become bad news?

This is where analysts enter the picture.

Analysts offer a glimpse into future earnings. "The stock market is forward looking. That is, stock prices are established on the expectations that prospective investors have for the future earnings power of the firm," states an article from the American Association of Individual Investors, a nonprofit organization that seeks to educate individual investors (tinyurl.com/vcjwh5z3).

The analysts' research "often involves modeling out forecasts for how a given company might perform in the future," explained Yahoo Finance's Brian Cheung (tinyurl.com/2yj6ahyu). "Using their own math, analysts will publish estimates for figures like revenue and [earnings per share]."

Those estimates are then collected and published as 'consensus' estimates by aggregators (Bloomberg, FactSet, S&P Capital IQ and Refinitiv). When a reporter talks about beating or missing expectations, that's the source of their information.

"Earnings estimates embody investors' opinions of factors such as sales growth, product demand, competitive industry environment, profit margins and cost controls," explained the AAII staff in "Earnings Estimates and Their Impact on Stock Prices". "Stock prices adjust as these expectations change or are proven wrong."

The AAII offered some main points to keep in mind when considering earnings estimates:

-- "Firms with high expected earnings growth tend to underperform the market because it is difficult to meet the market's high expectations. Companies with low earnings expectations tend to do better than expected."

-- "Realize that the stock price already reflects the general consensus about future earnings. Be aware that if a stock is highly touted, the basis for the recommendation should be an earnings forecast significantly above the prevailing opinion."

It turns out that the majority of S&P 500 companies do beat estimates. Randy Frederick, managing director of trading and derivatives at the Schwab Center for Financial Research, wrote in 2023 that about 78% of companies in the S&P 500 Index had "beaten their estimates on a quarterly basis since 2020" (tinyurl.com/32nd9vk4).

Frederick added that "Company executives -- who provide the earnings guidance that analysts use to create their estimates -- are loath to disappoint investors. Just as airlines can pad flight times to avoid being considered late, company executives can issue conservative earnings guidance so it's easier to meet or beat analysts' expectations."

How else can analysts affect prices? Take this Wall Street Journal story from May 8, 2024, titled "Heard on the Street: Why Lyft's Stock is Pulling Ahead of Uber's" (tinyurl.com/45amkynh).

Reporter Dan Gallagher pointed out that "Lyft has buy ratings from only 21% of the analysts covering the shares ... a sharp contrast to the 90% of analysts who rate arch-rival Uber as a buy, according to FactSet data."

However, Gallagher wrote, "low expectations can also be a blessing. Lyft's stock jumped 7% Wednesday following its results, which showed gross bookings for the first quarter of about $3.7 billion, 3% ahead of analysts' estimates." As for Uber, the first-quarter results "showed gross bookings of $37.65 billion, which was about 1% below Wall Street's target." Gallagher went on to note that "Uber's stock slipped nearly 6% on Wednesday."

As you might expect, consensus estimates are not an exact science. Plus, consensus "may not capture what the best analysts think about a company's prospects. A few analysts tend to make remarkably accurate earnings forecasts, while others can miss them by a mile," quoting Ben McClure of Investopedia.

McClure goes a step further by telling investors to search for analysts with the best track records for accurate forecasts (tinyurl.com/48j93umj).

Expectations do play a role in stock prices when earnings are released. But, in the end, it's buyers and sellers that actually set prices through millions of buy and sell orders.

DISTRIBUTED BY ANDREWS MCMEEL SYNDICATION

If you have a Social Security number, you also have something else: the possibility of someone trying to scam you. The methods being used by scammers are getting more and more bold, and if victims follow instructions, they are in danger of a face-to-face meeting with the scammer.

There have been "alarming reports that criminals are impersonating SSA OIG agents and are requesting that their targets meet them in person to hand off cash," according to the Social Security Administration's Office of Inspector General (OIG) (tinyurl.com/26kjsaf5).

Clearly, this method "introduces an element of physical danger to scams that never existed before," according to the OIG.

The scammer can start with a call that looks like it's official. That is, your phone's caller ID actually identifies the caller as "the Social Security Administration" (tinyurl.com/26uwejj5). The caller may even pose as a real Social Security Administration (SSA) employee by looking up an employee's name online.

According to a Federal Trade Commission Consumer Alert, "The caller says he's a Social Security Administration agent with an urgent warning: Your name and Social Security number are linked to serious crimes like money laundering and drug trafficking.

"You're panicked when he says there's an arrest warrant for you and the courts want to seize the money from your bank and retirement accounts. The only way to protect it, he claims, is to buy gold. The agent says he'll send someone to pick it up and will keep it safe until he can clear your name of any wrongdoing."

This is clearly an intimidating message that can cause someone to act if they are unprepared. It is essential to know that in the real world, "SSA OIG agents will never pick up money at your door or in any type of exchange. This is a SCAM!"

This type of scenario emphasizes the importance of knowing the methods the SSA will use to contact you.

According to the SSA (tinyurl.com/y2rkj47s), in general, it will call you if:

-- You have recently applied for a Social Security benefit.

-- You are currently receiving payments and need to update your record.

-- You have specifically requested a phone call from the SSA.

However, SSA will not do the following:

-- Threaten you with arrest or legal action.

-- Suspend your Social Security number.

-- Ask for personal details or banking information to give you a cost-of-living adjustment.

Further, the SSA will not demand an immediate payment from you, or require a payment be made "by cash, gift card, pre-paid debit card, internet currency, or wire transfer."

The OIG's Quarterly Scam Update to Congress in April 2024 reported that there was a 22.1% increase in scam allegations the OIG received in the first quarter of fiscal year 2024 (a total of 17,032), compared with the first quarter of fiscal year 2023 (tinyurl.com/4fxrnhve). While there was an increase, it was still well below the peak of 225,364 allegations during the first quarter of fiscal year 2021.

How do you avoid a Social Security scam?

The SSA offers tips at tinyurl.com/5d5abhuf:

-- Remain calm if you "receive a communication that causes a strong emotional response" and be sure to talk to someone you trust.

-- Hang up or ignore the message, including emails or texts that contain links or attachments.

-- Protect your money and your personal information.

If you realize you are being scammed, stop engaging; call the police to report what's happening. Take steps to assure that your financial accounts are safeguarded (contact your financial institutions to find out their procedures).

Then, report the scam to the SSA's Office of Inspector General: tinyurl.com/3w7h4bsa. If the contact was online, report the scam to the FBI's Internet Crime Complaint Center: tinyurl.com/3ta7mseb. For fraud, reach out to the Federal Trade Commission: tinyurl.com/4crphynd.

To keep up to date on possible Social Security scams, visit the Office of Inspector General's Scam Alerts website page at tinyurl.com/ytcntxw2.

The key to derailing a scammer is being prepared. Knowing what scams are out there is an important part of avoiding a financial loss.

DISTRIBUTED BY ANDREWS MCMEEL SYNDICATION

From time to time, readers of this column send me questions on topics of concern that relate to spouses. A particularly prickly topic is how Social Security retirement benefits work when a spouse dies.

I reached out to the Social Security Administration (SSA) for help.

"Harold" and "Wilma," a married couple, needed guidance. Harold just turned 70 and started taking his Social Security retirement benefit. Wilma, who also is 70 years old, had already been taking her own Social Security retirement benefit since age 62.

First, what are Wilma's options now that Harold is taking his Social Security?

According to the SSA, if a spouse qualifies for benefits on his or her own record, the SSA will pay that amount first. If the benefit on the spouse's record is higher, "they will get an additional amount on their record so that the combination of benefits equals that higher amount," according to the SSA spokesperson.

The "Benefits for Your Family" section on the Social Security website (tinyurl.com/y4jakh6k) provides guidance. The maximum family benefit ("Generally, the total amount you and your family can receive is about 150 to 180 percent of your full retirement benefit") is covered, as well as benefits for a spouse, benefits for children and benefits for a divorced spouse.

Second, what happens if Harold predeceases Wilma?

A surviving spouse "may be eligible for a higher survivor benefit," according to the SSA. If the surviving spouse is already receiving a benefit on a spouse's record, then the surviving spouse will automatically be converted into a "survivor" and will receive a survivor's benefit.

The SSA's "If You Are the Survivor" page (tinyurl.com/yc2mupcr) provides more details. There you will find who receives benefits, what happens if you are a surviving divorced spouse and how benefit amounts are factored for survivors.

Note: The website points out that in most cases, the funeral home handling the arrangements for the deceased will report the person's death to the SSA. However, if you need to report a death or apply for benefits, you can call the SSA at 800-772-1213. SSA representatives are available Monday through Friday. You also can contact your local Social Security office.

The Receiving Survivors Benefits Early page (tinyurl.com/2p9dmsuw) has a chart showing the "full retirement age" for survivors and a link to the regular full retirement age chart. The page also states "The earliest a widow or widower can start receiving Social Security survivors benefits based on age will remain at age 60," adding that "If a person receives widow's or widower's benefits, and will qualify for a retirement benefit that's more than their survivors benefit, they can switch to their own retirement benefit as early as age 62 or as late as age 70."

Third, what if Harold is unmarried at age 70 when he starts his retirement benefit and marries later. Assume his new wife has never worked, so she is not eligible for a Social Security retirement benefit on her own record. What happens?

Harold's new wife can apply for a spousal benefit if she is 62 or older, the details of which can be found on the "Benefits for Your Family" SSA webpage.

The spouse must be 62 throughout an entire month to be eligible for a spousal benefit.

To address your personal situation, take a little time to do some research using SSA resources. Don't skip the Frequently Asked Questions page at tinyurl.com/2f2kwr5a, which includes a popular question asked by many: "At what age should I start receiving my Social Security retirement benefits?" (tinyurl.com/4nf6jnju).

When there is lack of clarity on your best options, do not hesitate to contact SSA directly.

Ask for an appointment at your local office (find it at tinyurl.com/52t68mh8). Read more about documents needed for a widow's, widower's or surviving divorced spouse's benefits at tinyurl.com/24xjcf3f.

Before leaving this topic, let's tackle this question: How long can full benefits be expected to last? According to the Social Security Board of Trustees report released in early May, there is "enough dedicated revenue to pay all scheduled benefits and associated administrative costs until 2035, one year later than projected last year" (tinyurl.com/44nyhe4v).

That's both reassuring -- and distressing. What happens after 2035 will depend on Washington.

DISTRIBUTED BY ANDREWS MCMEEL SYNDICATION