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 periodicals archive ?
It's not like earnings guidance is essential for a well-developed financial market.
FIGURE 1 About 60% of S&P 500 Firms Gave Earnings Guidance # % Quarterly guidance only 29 5.8% Annual guidance only 168 33.6% Quarterly and annual guidance 106 21.2% Subtotal, any guidance 303 60.6% No earnings guidance 197 39.4% Total S&P 500 500 100% As points of comparison, online surveys conducted by the National Investor Relations Institute (NIRI) in 2001 and 2004 (as published in Investor Relations Update, December 2004 in an article entitled "The Lighthouse: Earnings Guidance") showed that, respectively, 79 percent and 76 percent of respondents said they provided earnings guidance.
CAPEX/SPD guidance possesses four characteristics not present in earnings guidance. First, CAPEX/SPD guidance is long term, whereas earnings guidance is typically about the current period.
In another cautionary tale, the SEC recently fined Flowserve, a global pump and valve maker based in Irving, Tex., $350,000 for affirming its earnings guidance at a private meeting with analysts, just one month after the company had issued the same affirmation publicly via a Form 10-Q.
* Box Inc (NYSE:BOX) reported stronger-than-expected results for its second quarter and reaffirmed its full-year earnings guidance. Box shares dipped 8% to $12.73 in the after-hours trading session.
Following a review, Gulf Marine has reduced earnings guidance for 2019.
We are raising earnings guidance due to the gain on the sale of METALfx and earnings from investments at our other businesses.
ENPNewswire-July 26, 2019--AEP Reports Second-Quarter 2019 Earnings, Reaffirms Full-Year Earnings Guidance
2018 operating earnings to be in the previously announced range of $3.80 to $4.25 per share, which, at the midpoint, represents a 10 percent increase from the midpoint of 2017 operating earnings guidance;
management maintained its prior earnings guidance for the 2015 fiscal year.
Management has raised its full-year earnings guidance to a range of $182 million to $268 million, or 18 cents to 27 cents per diluted share.
Entergy also affirmed its previously issued earnings guidance for 2011.