Weekly dec 14 covid
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2021 Guidance in a World with Covid-19 and a Vaccine

This week we are taking a look at guidance for 2021 and what that looks like as we head into a world with Covid-19 and a vaccine. We’ll look at which Mexican companies have already released guidance for 2021 and what USA companies are doing.

There are various benefits to issuing formal financial guidance:

  • Guidance helps investors and analysts better understand market dynamics, your expectations for growth and profitability and the sources of potential headwinds/tailwinds for your company in the year ahead.
  • It ensures that the whole marketplace receives the same guidance, and thus complies with fair disclosure rules. Since most companies give informal guidance over the phone, putting this down on paper for all makes the process more transparent.
  • Guidance helps sell-side analysts to make their forward estimates and reduces the impact of outlier estimates in the group of companies your performance will be measured against.
  • It also helps to increase the likelihood of earning above-average valuation multiples, by helping the investment community to understand management’s expectations for future growth and profitability.


However, there can also be some cons to publishing guidance

  • Missing guidance may have negative short-term and longer-term impacts.
  • It can be seen as ‘short-termist’ and a distraction for management teams.
  • It may require you to update the market on new guidance at an inconvenient time.
  • You may not have a strong idea of what you will earn next year, due to the volatile environment.


For the most part guidance is provided annually, and the majority provide guidance as a range. The four metrics most often reported are:

  1. Revenue or sales (or growth)
  2. Capital expenditures (optional)
  3. Earnings/EPS
  4. EBITDA or margins

With sales and EBITDA the most common.


The non-financial guidance often covers market conditions and trend information that could impact your company.

At the start of October FactSet reported that one in four S&P 500 companies were not providing EPS guidance for 2020 or 2021. However, this was before the announcement of Covid-19 vaccines being approved for use, when companies were feeling slightly more wary and conservative.

If we look at this from a sector level, the Consumer Discretionary sector has by far the largest proportion of companies NOT providing guidance compared to those which are (33:4). The majority of sectors, including Industrials, Real Estate, Consumer Staples and Materials, have more companies which have not issued guidance than those which have. The Financial and Energy sectors are balanced between those businesses which have and have not published guidance. However, it is not surprising that sectors that have been less affected, or even positively affected by the pandemic, including Health Care, Information Technology and Communication Services, have a greater number of companies which have given guidance than those which have abstained. The Utilities sector stands out as, according to FactSet research, 100% of Utilities companies provided guidance.

Most Mexican companies which choose to release guidance for 2021 will do so in their 4Q20 report, published in February 2021, however, some have got ahead of the curve. Rotoplas, Walmex and Banorte have already published their guidance for 2021, whilst Arca Continental, Ienova (according to Deloitte) and FEMSA have all committed to publishing guidance, but are yet to do so.

As always, if you need any advice on IR matters, including the decision of whether to publish guidance, Miranda IR is here to help.