The quarter guidance game is a myth
CNBC Stock Blog
By Herb Greenberg
March 8, 2011
Shocker: Contrary to what you probably believe — at least contrary to my belief! — most companies do not give quarterly earnings guidance.
According to Factset, which did a run at my request:
- Only 96 of the S&P 500 give quarterly earnings guidance.
- 64 offer sales guidance.
- 50 give both quarterly sales and earnings guidance.
Further, according to Factset:
- A more robust 225 give annual earnings guidance.
- 144 give annual sales guidance.
- 116 give both annual sales and earnings guidance.
Moral of the story: The quarter guidance game is a myth. All of that fuss about missing, meeting and beating every quarter is mostly the result of analysts conjuring up their own numbers, resulting in a consensus that the companies than either miss, meet or beat.
Which means, in the end, stocks react to a made-up number.
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