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 (list ...

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 r ...

's official prediction of its own near-future profit or loss, stated as an amount of money per share; see

Earnings call An earnings call is a teleconference, or webcast, in which a public company discusses the financial results of a reporting period ("earnings guidance"). The name comes from earnings per share (EPS), the bottom line number in the income statement d ...

. 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 A stock market, equity market, or share market is the aggregation of buyers and sellers of stocks (also called shares), which represent ownership claims on businesses; these may include ''securities'' listed on a public stock exchange, as ...

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 ha ...

, 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 (l ...

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 policies ...

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

References

{{econ-stub Financial markets Corporate finance