Forward Guidance

Forward guidance is a company own forecast for future results, such as expected revenue or earnings for the next quarter or year. Management provides it to help investors set expectations. Because markets are forward-looking, guidance often moves the stock more than the results just reported.

Compare guidance with analyst expectations: guidance above estimates is bullish, while a cut can sink a stock even after a strong quarter. Watch whether management raises, maintains, or lowers guidance over time as a signal of momentum. Treat guidance as informed estimates, not promises, since conditions can change.

A company beats this quarter but guides next-quarter revenue to 90 million dollars when analysts expected 100 million. The weak outlook can send the stock lower despite the current beat, because investors price in the future.