In financial reporting, earnings guidance or simply guidance is a
publicly traded
A public company is a company whose ownership is organized via shares of share capital, stock which are intended to be freely traded on a stock exchange or in over-the-counter (finance), over-the-counter markets. A public (publicly traded) co ...
corporation
A corporation or body corporate is an individual or a group of people, such as an association or company, that has been authorized by the State (polity), state to act as a single entity (a legal entity recognized by private and public law as ...
's official prediction of its own near-future
profit
Profit may refer to:
Business and law
* Profit (accounting), the difference between the purchase price and the costs of bringing to market
* Profit (economics), normal profit and economic profit
* Profit (real property), a nonpossessory inter ...
or loss, stated as an amount of money per share. 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. Depending on context, the term may also refer to listed company (quarterly) earnings gui ...
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.
stakeholders in valuing the corporation, and helps prevent overvaluation.
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
A public company is a company whose ownership is organized via shares of stock which are intended to be freely traded on a stock exchange or in over-the-counter markets. A public (publicly traded) company can be listed on a stock exchange ( ...
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 the eurozone (EZ), is a Monetary union, currency union of 20 Member state of the European Union, member states of the European Union (EU) that have adopted the euro (Euro sign, €) as their primary currency ...
companies rarely (1%) issued quarterly guidance in the 2010s.
Financial statement
Financial statements (or financial reports) are formal records of the financial activities and position of a business, person, or other entity.
Relevant financial information is presented in a structured manner and in a form which is easy to un ...
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Income statement
An income statement or profit and loss accountProfessional English in Use - Finance, Cambridge University Press, p. 10 (also referred to as a ''profit and loss statement'' (P&L), ''statement of profit or loss'', ''revenue statement'', ''statement o ...