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 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 ( l ...

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 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; 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) ...

presented as a

quarterly report In the private sector, a quarterly finance report is a financial report that covers three months of the year, which is required by numbers of stock exchanges around the world to provide information to investors on the state of a company. "Private se ...

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, o ...

s and the stock market in valuing the corporation, and helps prevent overvaluation. According to

Investopedia Investopedia is a financial media website headquartered in New York City. Founded in 1999, Investopedia provides investment dictionaries, advice, reviews, ratings, and comparisons of financial products such as securities accounts. 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 polic ...

companies rarely (1%) issued quarterly guidance in the 2010s.

References

{{econ-stub Financial markets Corporate finance