Do financial analysts improve the quality of earnings forecasting? Evidence from Central Europe, 2014–2024

Purpose This study examines whether consensus analyst forecasts for annual earnings per share (EPS) are more accurate than a standard random walk (RW) model for companies listed on the Warsaw Stock Exchange, the Prague Stock Exchange, the Budapest Stock Exchange and the Bucharest Stock Exchange during 2014–2024. Design/methodology/approach Consensus analyst forecasts for annual EPS from EquityRT are compared against RW model predictions using mean arctangent absolute percentage error, mean absolute error and mean square error. Wilcoxon and permutation tests assess statistical significance. For the Warsaw Stock Exchange, which provides the largest sample, the analysis is further stratified by analyst coverage intensity, firm capitalization, industry classification, corporate governance structure, institutional ownership composition and dividend orientation. Robustness checks employ alternative error metrics across multiple dimensions. Findings Consensus analyst forecasts for annual EPS demonstrate no statistically significant differentiation from RW predictions for Poland (excluding 2020), the Czech Republic (excluding 2020 and 2022), Hungary (excluding 2020) and Romania (excluding 2019 and 2022). This finding holds with respect to ownership structures and dividend policies. In the Polish market, for which detailed multi-dimensional analysis is provided, the absence of analyst advantages persists across annual periods, analyst coverage levels, firm sizes and industry groupings. These results challenge prior evidence of analyst superiority over statistical models in developed markets by drawing on a distinct market setting. Originality/value This investigation provides the first rigorous statistical examination of analyst forecasting performance across the major Central European capital markets, offering broader empirical insights into the boundary conditions of analyst expertise. The findings challenge the universal applicability of analyst superiority documented in developed markets, demonstrating that consensus analyst judgment provides no measurable advantage over RW benchmarks for annual EPS forecasting when market conditions exhibit RW earnings behavior. These results carry immediate implications for global investment strategies and resource allocation decisions, suggesting that expenditures on equity research may be misallocated in markets where fundamental earnings unpredictability renders consensus analyst forecasts no more accurate than RW benchmarks for annual EPS.