A Shocking Number of Estimate Cuts
With earnings season safely in the rear view mirror, the second element of the "report card" is due. The first element, which I analyzed last week, was the number of earnings surprises. The second element is guidance, which is actually more important than surprises, since guidance is forward-looking and earnings are backward-looking. So how was guidance in this reporting season?
Because not all companies guide, and because it is often hard to track, I use the proxy of looking at the third-quarter earnings-per-share estimate before and after earnings season. The direction of change in the third-quarter estimate tells you 80% of what you need to know. If numbers are down, either management guided down or the outlook was bearish in general....79 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.
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