In financial reporting, earnings guidance or simply guidance is a
publicly traded corporation
A corporation is an organization—usually a group of people or a company—authorized by the state to act as a single entity (a legal entity recognized by private and public law "born out of statute"; a legal person in legal context) and ...
's official prediction of its own near-future
profit or loss, stated as an amount of money per
share; see
Earnings call.
Earnings guidance is usually a
financial forecast
A financial forecast is an estimate of future financial outcomes for a company or project, usually applied in budgeting, capital budgeting and / or valuation; see .
Depending on context the term may also refer to listed company (quarterly) ea ...
presented as a
quarterly report of the corporation's performance in the next quarter.
Guidance is an aid to
financial analyst
A financial analyst is a professional, undertaking financial analysis for external or internal clients as a core feature of the job.
The role may specifically be titled securities analyst, research analyst, equity analyst, investment analyst, ...
s and the
stock market in
valuing the corporation, and helps prevent overvaluation.
According to
Investopedia, Guidance refers to Information that a company provides as an indication or estimate of its future earnings. Guidance reports estimating a company's future earnings have some influence over analyst stock ratings and investor decisions to buy, hold, or sell the security.
In the United States, a quarterly revenue forecast, or quarterly guidance, by
publicly traded companies had become by the 2000s both a common practice (75% of American firms in 2003) and a major influence on the firm's share price.
By the 2010s, the quarterly guidance practice had fallen out of favor among many companies (27% of firms continued the practice in 2017) as it was seen as emphasizing a focus on short-term performance.
By contrast, public
Eurozone
The euro area, commonly called eurozone (EZ), is a currency union of 19 member states of the European Union (EU) that have adopted the euro ( €) as their primary currency and sole legal tender, and have thus fully implemented EMU polici ...
companies rarely (1%) issued quarterly guidance in the 2010s.
References
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Financial markets
Corporate finance