At this point in the year, many companies are preparing to issue 2013 guidance as part of their calendar 4Q earnings call. We thought it would be helpful to share some insights and best practices about the most effective ways for your company to issue earnings guidance.
- Be realistic. Trying to figure out what you’re going to earn a year from now is difficult, and occasionally companies trip themselves up because they issue guidance that they know in their hearts is not attainable. Managements should honestly assess their prospects for the next year, haircut their internal numbers a bit, and provide guidance that feels 100% attainable.
- Range or point estimate? Issuing a guidance range is always the best answer. As you consider this range, make sure it is appropriate for your company’s size and business model. Too wide of a range implies that you may not have a good handle on your business. Too narrow a range doesn’t leave any wiggle room. Continue Reading