Guidance (Earnings Guidance)
A company's own forecast of next quarter's or the year's results — the company's self-forecast that shapes market expectations and moves the price.
In plain terms
Guidance is a forecast a company itself puts out: "next quarter (or this year) revenue and profit will be roughly this much." It is like the company giving a weather forecast for its own business.
It is usually announced alongside the past quarter's results at the earnings release. Analysts use this guidance to refine the consensus (the market's expectation).
What it tells you
Often guidance moves the price more than the past results, because the market trades on the future rather than the past. It is common for the price to fall even on good results if the next outlook (guidance) is poor.
Raising guidance (an upgrade) is read as a sign the company is confident about the road ahead; lowering it (a downgrade), as a sign conditions or demand are cooling.
Formula
guidance = the expected range of future revenue, profit, etc. a company announces (e.g. "next quarter revenue $100–105M")
What high or low means
A guidance upgrade is usually taken positively, a downgrade negatively. But companies tend to set it deliberately conservative (to clear later easily), so it is hard to take at face value.
When a company gives no guidance at all or withdraws it, it can signal that the road ahead is uncertain.
Guidance is a forecast a company gives "itself," so it is not objective fact but mixed with management's expectations and intentions. They sometimes manage it by setting it low to clear later easily, so look at the usual gap between guidance and actual results.
Guidance is often given on an adjusted (Non-GAAP) basis, so comparing it directly with accounting-standard (GAAP) results can mismatch.
When the macro environment changes fast, companies revise guidance often. More than a single given number, "how it changes" matters more. (※ Guidance is information a company gives in earnings releases and press releases; our screen handles confirmed results based on SEC filings — this term is background for reading earnings news.)
Metrics to read alongside
See it in real stocks
Search US stocks on Stocklore to see Guidance and other financial metrics alongside the sector average.
This explanation is for information and reference only and is not a recommendation to buy or sell any security. Investment decisions and their consequences are your own.