What is an analyst's consensus estimate?

An analyst's consensus estimate represents the collective forecast of a company's future earnings based on the predictions made by various analysts in the field. This consensus is typically calculated as the average of all the individual forecasts, providing a more balanced and comprehensive view of what multiple experts believe the company's earnings will be.

Using the average helps mitigate the effect of outliers, such as overly optimistic or pessimistic predictions, delivering a more reliable estimate that investors and stakeholders can consider when making decisions. This consensus estimate is often looked at by investors as it reflects a general sentiment in the market regarding a company's financial performance.

The other options do not accurately capture the definition of the consensus estimate, as they focus either on extremes (highest or lowest forecasts) or on the range without addressing the averaging effect that defines the consensus.