Profit Warning

AAA

DEFINITION of 'Profit Warning'

When a company advises its earnings will not meet analyst expectations. The profit warning is made prior to the public announcement of the company's earnings.

INVESTOPEDIA EXPLAINS 'Profit Warning'

A profit warning is usually done two or more weeks before an earnings announcement. Companies do this to soften the blow to investors. This gives the investors and the market more time to adjust accordingly before the public release, ideally taking some of the sting out of the expected price adjustment. If no profit warning is released, the earnings announcement is called a negative earnings surprise.

RELATED TERMS
  1. Street Expectation

    The average estimate of a public company’s quarterly earnings ...
  2. Analyst Expectation

    A report issued by an individual analyst, investment bank or ...
  3. Gross Profit

    A company's revenue minus its cost of goods sold. Gross profit ...
  4. Earnings Surprise

    Occurs when a company's reported quarterly or annual profits ...
  5. Profit Taking

    The action of selling stock to cash in on a sharp rise. This ...
  6. Earnings

    The amount of profit that a company produces during a specific ...
Related Articles
  1. Economics

    Invest In Yourself With A College Education

    Spending a few thousand dollars on school could help you earn millions more.
  2. Markets

    The 5 Types Of Earnings Per Share

    A look at the five varieties of EPS and what each represents can help an investor determine whether a company is a good value, or not.
  3. Economics

    Earnings Guidance: Can It Accurately Predict The Future?

    Explore the controversies surrounding companies commenting on their forward-looking expectations.
  4. Insurance

    Everything Investors Need To Know About Earnings

    We go over the concepts behind the excitement over the most important figure in the stock market.
  5. Active Trading

    What Is Warren Buffett's Investing Style?

    Learn the main principles that Warren Buffet uses in assessing a company. His take on value investing may surprise you.
  6. Markets

    The Most Important Metrics For Earnings Season

    Knowing how to read an earnings report can help investors decide which stocks to buy.
  7. Fundamental Analysis

    4 Things To Know About Earnings Season

    Investors should know that earnings reports are not just about the earnings.
  8. Markets

    Are Your Stocks Doomed?

    When a company is headed for trouble, the warning signs are usually there. Learn how to spot disaster.
  9. Fundamental Analysis

    What are the components of shareholders' equity?

    Understanding company valuation figures, such as shareholders' equity, can be a powerful tool in assessing the financial strength of a business.
  10. Bonds & Fixed Income

    What is the difference between the yield of stock and the yield of a bond?

    Explore and understand the various meanings of the investment term "yield" as it is applied to equity investments and bond investments.

You May Also Like

Hot Definitions
  1. Commercial Paper

    An unsecured, short-term debt instrument issued by a corporation, typically for the financing of accounts receivable, inventories ...
  2. Federal Funds Rate

    The interest rate at which a depository institution lends funds maintained at the Federal Reserve to another depository institution ...
  3. Fixed Asset

    A long-term tangible piece of property that a firm owns and uses in the production of its income and is not expected to be ...
  4. Break-Even Analysis

    An analysis to determine the point at which revenue received equals the costs associated with receiving the revenue. Break-even ...
  5. Key Performance Indicators - KPI

    A set of quantifiable measures that a company or industry uses to gauge or compare performance in terms of meeting their ...
  6. Bank Guarantee

    A guarantee from a lending institution ensuring that the liabilities of a debtor will be met. In other words, if the debtor ...
Trading Center