Reading more, beyond the bottom line...
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Stocks work the same way, based on the expectations set by their historical sales record, and factors that are expected to affect the next quarter's sales and profits. The company sets what is called "Earnings Guidance" for the next quarter, as a total revenue and profit goal, and then divided by the total number of shares outstanding, to calculate the expected earnings-per-share, or EPS. If the company announces that it exceeded those projections, its stock price will likely go up, and if it disappoints, then it can go down dramatically. Other Considerations: Along with the actual earnings reported each quarter, they are always accompanied by yet another set of guidance numbers for the quarter after that. If that guidance indicates that sales and profitability will worsen, then the stock price can go down, even if they met or exceeded that quarters' earnings goals. Important Note: Some companies do not provide forward-looking guidance, as a policy.
Sandbagging - or the concept of "UPOD": to "underpromise and overdeliver." You should also understand this concept that many companies utilize to understate their projected earnings for the next quarter, to be as conservative as possible, so that they consistently please analysts and beat their established earnings guidance.
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Short and Sweet: The reason for this brevity in their forward-looking earnings guidance is simple. They don't want to elaborate too much on the sources of business that will make this goal happen, so that they aren't scrutinized on each point, when the next quarter occurs. They keep it short and sweet for a reason. (for those of you who remember the Dragnet series... it's "Just the facts, ma'am.")
Here's what we found through the link shown above: Intel states its "Earnings Guidance" for the upcoming quarter, but also restated their expected full-year guidance for 2010:
Earnings Guidance - Introductory Statement:
"The Outlook for the second quarter does not include the gain expected from the sale of our investment in Numonyx, nor does it include the effect of any other acquisitions, divestitures or similar transactions that may be completed after April 12th."
Specific Earnings Guidance for Q2 2010:
Revenue: $10.2 billion, plus or minus $400 million.
Gross margin percentage: 64 percent, plus or minus a couple percentage points.
R&D plus MG&A spending: Approximately $3.1 billion.
Impact of equity investments and interest and other: approximately zero.
Depreciation: Approximately $1.1 billion.
Restated Full-Year 2010 Earnings Guidance:
Gross margin percentage: 64 percent, plus or minus a couple percentage points. The company's prior expectation was 61 percent plus or minus 3 percentage points.
Spending (R&D plus MG&A): $12.4 billion, plus or minus $100 million. The company's prior expectation was $11.8 billion, plus or minus $100 million.
R&D spending: Approximately $6.4 billion.
Tax rate: Approximately 31 percent for the second, third and fourth quarters.
Depreciation: Approximately $4.4 billion, plus or minus $100 million.
Capital spending: Expected to be $4.8 billion, plus or minus $100 million.
[link to this information - here >]
Final Important Note: Some companies have established a policy to NOT provide earnings guidance for the following quarter. In that case, you need to do more homework to determine the rationale behind the analyst estimates for the next quarter - how much and why? Just search Google News for "Intel 2Q Analyst Estimates" (or similar, of course, for your company).
The next step, looking at the , is an important factor to understand and identify key company insiders and track their behavior as they buy and sell their own personal stock, known as Insider Buying & Selling...
More about this in Step 260...
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