Long-term investing

Guidance

Defined in 1 lesson · Updated October 17, 2026

Definition

Management’s own forecast for the next quarter or the full year. A raise supports the story; a cut is often the first crack.

Example

Suppose company XYZ has guided to full-year revenue of $800 million to $820 million. With its third-quarter report, management raises the range to $840 million to $860 million, which supports the growth story. Had it cut the range to $760 million to $780 million instead, the stock could have fallen even after a strong quarter, because investors care most about what comes next.

Hypothetical numbers, for illustration only.

Two panels of quarterly EPS growth bars labeled Q1 to Q4: on the left, accelerating, with +10%, +20%, +35% and +50%; on the right, decelerating, with +50%, +35%, +20% and +10%.

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