TY - JOUR T1 - Practical Applications of A Trading Strategy to Profit from Overly Aggressive Downward Earnings Guidance JF - Practical Applications SP - 1 LP - 4 DO - 10.3905/pa.2014.1.4.046 VL - 1 IS - 4 AU - Randall S. Billingsley AU - Bruce G. Resnick A2 - Connett, Wendy Y1 - 2014/04/30 UR - https://pm-research.com/content/1/4/1.10.abstract N2 - A Trading Strategy to Profit from Overly Aggressive Downward Earnings Guidance Randall S. Billingsley Bruce G. Resnick It’s commonly assumed that companies tend to issue earnings guidance below the expectations of analysts that follow them, so that actual earnings announcements result in a pop in their stock prices.“Given this, it seems logical that firms would want to dampen analysts’ expectations. And if one could identify when analysts’ expectations had been aggressively guided downward, perhaps a trading strategy could be developed to capture the expected large pop in stock price when the large surprise becomes public knowledge,” Bruce Resnick , Professor at the Wake Forest University School of Business in Winston-Salem, NC, tells us.Resnick and his co-author set out to test this hypothesis. They detail their research in A Trading Strategy to Profit from Overly Aggressive Downward Earnings Guidance , in the Winter 2014 issue of The Journal of Portfolio Management . Resnick discusses actionable findings in this Practical Applications report. ER -