At Corbin, the question is not “To provide or not to provide guidance?” but rather, “What kind of guidance should we provide?”
Having developed an expertise in guidance strategy, including setting, updating, and communicating — based on primary research, empirical data, and company experience — we fully understand the dynamics associated with issuing guidance and appreciate that the ‘what’ and ‘how’ is not a one-size-fits-all approach. Indeed, our experience shows that determining both what guidance to issue and how to communicate it is both science and art and should be thoughtfully developed in the context of company reality and broader market conditions and delivered leveraging best practices.
As we always say, it’s Super Bowl Sunday every earnings season, but guidance is not a game of gotcha. We want the Street to fully understand our performance outlook and provide enough color to adroitly manage expectations during the quarter. Over time, quarter by quarter, trust is built with the Street, resulting in deeper leadership credibility.
According to our research on this critical topic, over 90% of investors and analysts report that companies should issue some form of quantitative guidance, with nearly 70% favoring companies that provide both annual and quarterly outlooks. Rationale provided by the investment community in favor of issuing guidance centers on:
- Frames and reigns in sell side and buy side estimates, and supports more reasonable market expectations
- Establishes and builds leadership credibility
- Attracts higher quality buy side interest and sell side coverage
- Helps minimize stock price volatility
As we have shared many times, our proprietary research points to leadership quality as the leading investment factor among buy-side professionals, with credibility identified as the number one trait of best-in-class executives. And, as our research shows time and time again, executive credibility is directly correlated with transparency, which is a critical factor in stock performance and multiple expansion over time.
As such, building strength and recognized prowess around guidance setting, updating, and communicating not only allows you to take greater control over your equity narrative, but it also establishes trust and accountability with investors.
Corbin Advisors is a strategic consultancy accelerating value realization globally. We engage deeply with our clients to assess, architect, activate, and accelerate value realization, delivering research-based insights and execution excellence through a cultivated and caring team of experts with deep sector and situational experience, a best practice approach, and an outperformance mindset.