December 19, 2023
How can the issuance of guidance positively impact your company?
Our latest research underscores that offering guidance isn’t merely a favored practice among investors, but it is potentially linked to share price appreciation and heightened Street awareness.
In an analysis encompassing 100 North American companies, each with market capitalizations of at least $1 billion and representing diverse sectors and company sizes, we analyzed the impact that guidance practices have on long-term company performance.
Two Key Findings:
- Outperformance of Guidance Issuers: Results reveal a consistent trend — companies issuing quantitative guidance consistently outperformed their counterparts over a mid- and long-term period.
- Analyst Coverage Disparity: When delving into small-cap constituents (market capitalization <$2 billion), the analysis uncovered a notable difference in sell side coverage. Companies providing guidance averaged an impressive 8.2 analysts, while their non-issuing counterparts lagged at 4.9 analysts. This suggests that providing guidance not only attracts, but is a potential prerequisite for securing robust sell side coverage.
Our findings reveal that beyond financial performance guideposts, building prowess around guidance strategy can be a pivotal enabler of shareholder value, leadership credibility, and analyst engagement. Importantly, effective communication is a critical success factor.
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.