The Accuracy of Equity Analysts’ Earnings Per Share Forecasts of Agribusinesses and Sugar-Using Firms

This study evaluates equity analysts’ earnings forecasts, comparing United States (U.S.) sugar-using firms (SUF), and a selected group of agribusinesses (AGB). Aspects of U.S. sugar policy, reinitiated in 1982, help to ensure a reliable and predictable domestic supply of SUF's primary ingredient, sugar. U.S. sugar policy requires the U.S. Department of Agriculture (USDA) to generate publicly available sugar supply and demand forecasts through its World Agriculture Supply and Demand Estimates (WASDE) report, introduced in 1992 and expanded in 2008 to include Mexican sugar forecasts. Therefore, we examined whether the reinitiation of U.S. sugar policy, the initiation of WASDE sugar forecasts, and the implementation of the North American Free Trade Agreement (NAFTA) for sugar trade benefited SUF by improving equity analysts’ earnings per share (EPS) forecasting accuracy for these firms. This analysis, mainly based on difference-in-differences and event-study regression, focused on EPS forecast accuracy from 1976 to 2025. Consistent with our hypothesis, we found that improvements in SUF EPS forecast accuracy were statistically associated with the reinitiation of U.S. sugar policy in 1982 and, to a lesser extent, with the implementation of the NAFTA sugar provision in 2008. More broadly, our analysis suggests that, given its role as a price- and supply-stabilizer, U.S. sugar policy might have caused a structural shift in the U.S. sugar industry, providing a more predictable business environment, and that its legacy may remain present in the contemporary forecasting environment.