No. of Recommendations: 0
Hey Rick,

Thnking out loud...

just because a company doesn't put up softball projections they know they'll beat by a penny doesn't mean that the estimates and whisper numbers won't be out there, widely circulated. What's the difference?

I'd argue that if the company doesn't put them out, the company is allocating those same resources into something more valuable for the shareholder. However, I'm a little confused by this point you made:

The company is still going to have incentives to beat those targets any way possible.

Are you saying that a company will have executive bonuses based on EPS and not something more tangible? I guess if they have earnings goals, translating them into EPS goals is pretty trivial. For some reason the company having INTERNAL earnings goals seems much more reasonable than spouting off EXTERNAL EPS goals, even though they are basically the same things.

Strange how psychology plays such an important role in how we view companies. I guess an EPS forecast would be better to come from a company rather than the Wise. It's hard being wrong.

Print the post  


What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.