Guidance

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Guidance

It is increasingly important for firms to meet or exceed analysts' consensus earnings forecasts. Often management will give guidance or hints of the earnings per share prospects over the next quarter or next year to try to direct the consensus to what is achievable. For example, it is possible that the consensus is well above management's internal forecasts. Management will try to guide the consensus downwards so that when the earnings are released the negative surprise is minimized. Under Regulation FD, management needs to be very careful to provide guidance information to all shareholders -- not just a select group of analysts. This is often achieved in investor presentations (that are often webcast) or conference calls (where anyone is allowed to dial in).

Guidance

An announcement, often over a conference call, by a publicly-traded company of its projected earnings for a quarter or year. Guidance gives investors and analysts a basis from which to make their investment decisions and recommendations. Guidance also helps the company price out any potential good or bad news so its share price is not subject to wild fluctuations when the earnings are actually announced. Guidance is also called earnings guidance.

Guidance.

Guidance, or earnings guidance, occurs when the executives of a publicly traded corporation estimate projected earnings in an open conference call or Web cast before its quarterly earnings are released.

Goals for providing guidance include underplaying expectations to avoid negative surprises, serving as a counterpoint to stock analysts' consensus estimates, reducing stock price volatility when actual results are announced, and potentially shifting investor focus from short-term results to long-term perspectives.

Corporations also provide guidance to the investing community as a whole because they are prohibited by Securities and Exchange Commission (SEC) Rule FD (for Fair Disclosure) from providing important and previously nonpublic information selectively, as they did before the rule was enacted in 2000.

Those who advocate providing this type of guidance argue that the more information investors have the better. Detractors say guidance doesn't reduce volatility or achieve other goals.

References in classic literature ?
The Templar would have made an angry reply, but was interrupted by the Prior, who again expressed his astonishment, that their guide, after such long absence, should be so perfectly acquainted with the passes of the forest.
I was born a native of these parts,'' answered their guide, and as he made the reply they stood before the mansion of Cedric; a low irregular building, containing several court-yards or enclosures, extending over a considerable space of ground, and which, though its size argued the inhabitant to be a person of wealth, differed entirely from the tall, turretted, and castellated buildings in which the Norman nobility resided, and which had become the universal style of architecture throughout England.
The journey was resumed at six in the morning; the guide hoped to reach Allahabad by evening.
At two o'clock the guide entered a thick forest which extended several miles; he preferred to travel under cover of the woods.
The guide took them, thinking them merely a few pieces of little value; but the light of the torch revealed their true worth.
It is easy for the guide to let his bridle be--he is accustomed to place himself in that helpless position under stress of circumstances, and he knows exactly what his pony can do.
SOCRATES: And a person who had a right opinion about the way, but had never been and did not know, might be a good guide also, might he not?
It happened (a thing not very unusual), that the guide who undertook to conduct him on his way, was unluckily unacquainted with the road; so that having missed his right track, and being ashamed to ask information, he rambled about backwards and forwards till night came on, and it began to grow dark.
There may be roads for them that know that country well; but for my part I had no better guide than my own nose, and no other landmark than Ben More.
My man Friday had delivered our guide, and when we came up to him he was helping him off his horse, for the man was both hurt and frightened, when on a sudden we espied the bear come out of the wood; and a monstrous one it was, the biggest by far that ever I saw.
His guide, who appeared to understand his reluctance, trimmed the candle, and taking it in her hand, approached the bed.
Ninaka, he said, would furnish guides to escort Bulan and his men through the jungle to the point at which they might expect to find Muda Saffir.