Guidance in terms of earnings or revenues is provided not as part of some legislation but comes in handy for the stock market as well as analysts in correctly arriving at the company's valuations without much variation. So what is guidance?
It is actually nothing more than the estimates of the future earnings of a company. The expected results are provided to the stakeholders and market watchers as what is envisioned for a particular future course of time.
What all guidance value includes?
Guidance value can be provided in terms of earnings or revenues. It may also be expressed as margins and capital spending estimates.
The IT industry provides dollar revenue guidance which means their earnings estimates in dollar terms as they primarily outsource their services and make earnings in dollar currency.
When guidance value is provided by corporate in general?
Generally companies provide revenue guidance at the quarterly company results. But these values can also be publicized during specific financial transactions in the market or analyst meets. Such earning guidance can also be offered at the time of some financial releases.
Other information that forms the part of guidance
The statement providing guidance estimates also provides other useful information. Other than guidance estimate in relation to earnings and revenues, guidance can also be provided in respect to inventory, cash flow or units of the product sold.
How guidance value impacts company stocks?
The figure is quiet important as it impacts company's stock with respect to its ratings and also investor sentiment in terms of buy, sell or hold decision for that particular stock.