3 Financial Guidance
In a Nutshell
Investors judge companies on the basis of future profits and cash flows. «Financial guidance», also called «earnings guidance», is understood to be the official financial projections of listed companies.
Financial guidance is a proven method to manage investors’ expectations.
Forecasts for operating income and projections for revenue are the most frequent form of financial guidance in Switzerland.
In the US, it is the expected earnings per share – for the current or next quarter of fiscal year – that is the most frequently used key projection metric.
Investors and analysts generally estimate the growth prospects of companies with a good track record on the high side. As a result, the share price of such a company often corrects particularly sharply in the event of a profit warning.