Tuesday, July 10, 2007

Companies Issuing Conservative Earnings Guidance

From IBD:

Firms have given bearish outlooks. The negative-to-positive ratio of preannouncements for all stocks is 2.3 to 1 for the second quarter, a bit above average. The S&P 500 ratio is 3.2 to 1, so investors may have priced in bad news.


This is something the financial press should write about a whole lot more. Companies are very media savvy -- they know how to try and manage expectations through media relations. Because of the slow growth in the first quarter it makes perfect sense for companies to issue conservative earnings guidance. As a result, an earnings announcement that beats lowered guidance will have a larger possibility of having a positive impact on the stock price.