CFO.COM (November Issue)
“Is providing quarterly earnings guidance worth the effort?” Increasingly U.S. companies are saying no. Quarterly guidance is criticized for “consuming an inordinate amount of time, rarely hitting the bull’s-eye, and unnecessarily shifting company’s focus to short-term tactics at the expense of long-term value.” While quarterly guidance still remains common, more companies are moving toward “annual guidance with quarterly updates.” According to the National Investors Relations Institute, the percentage of companies providing quarterly guidance has fallen from 86% to 76% since 2009. A McKinsey & Co. study analyzed 4,000 public companies, finding that “quarterly earnings guidance does not result in superior valuation.” Many companies who want to discontinue the practice, however, may hesitate out of fear analysts might assume they were trying to hide something.
Tags: Analysts, Annual guidance, McKinsey, NIRI, Quarterly earnings guidance, Quarterly updates, Valuation
Euromoney (August Issue)Euromoney (August Issue)
“Trust has broken down between IPO vendors and issuers and traditional investors in new stock offerings in Europe. Deal arrangers seem incapable of bridging the valuation gap between the two sides.” Issuer focus on achieving high valuation is colliding with investor expectation to buy at a discount. As a result, 50% of Europe’s large planned IPOs failed this year. The situation is only slightly better for IPOs of all sizes. “In the first seven months of this year, 143 initial public offerings were priced for European issuers, while 50 others, over one-third as many, were either announced and then postponed or launched and then pulled. That’s a very high failure rate.”
“Trust has broken down between IPO vendors and issuers and traditional investors in new stock offerings in Europe. Deal arrangers seem incapable of bridging the valuation gap between the two sides.” Issuer focus on achieving high valuation is colliding with investor expectation to buy at a discount. As a result, 50% of Europe’s large planned IPOs failed this year. The situation is only slightly better for IPOs of all sizes. “In the first seven months of this year, 143 initial public offerings were priced for European issuers, while 50 others, over one-third as many, were either announced and then postponed or launched and then pulled. That’s a very high failure rate.”
