On Monday, CBRL Group
The company recommended "caution in considering its current trends" relative to earnings guidance. The gist of it was that CBRL was guiding analysts toward the low end of previously announced EPS guidance of $0.73 to $0.76 for the fourth quarter. Not that it expects to miss the range, but that it will come in toward the low end of the range.
May I say I consider this type of guidance-tweaking to be an unhealthy trend in financial markets? OK, I applaud management for being forthright and keeping investors fully informed. And analysts and market reporters feed on this type of info, more data for the daily grist mill of financial news. The press release spawned no fewer than eight articles mentioning CBRL's announcement, including a "sell" recommendation on Jim Cramer's "lightning round." (No aspersions cast on Mr. Cramer; I find his show hugely entertaining.)
But do investors really need this type of guidance? I guess anyone buying and selling stocks based on short-term market sentiment welcomes frequent updates. But I contrast that with Berkshire Hathaway
Now I think we all understand the reason for CBRL's comments. The company updated third-quarter guidance in March, only to miss by $0.02 when actual results were posted in May. Might it be working to move the analyst estimate down a few cents so it can "hit the number?" Bet on it. While that's understandable given that it missed last quarter, it's also a sad commentary on the importance the financial community puts on meeting or exceeding analyst estimates. Are the analysts really that important? Could we live without their consensus estimates? I could.
Frankly, I'm getting a little fed up with all this maneuvering. No wonder companies like Motley Fool Inside Value pick Coca-Cola
OK, perhaps that's enough of the Don Quixote act. Windmills are what they are, and brandishing a lance usually doesn't have a big effect. But at least we can take advantage of everyone else's fixation on short-term results. Pick a select group of companies you really admire. Make it a short list: The Motley Fool's Rule Breakers or Inside Value picks are a great place to start. Do your own valuation; figure out what you think the stock is worth. Wait for some negative sentiment to knock the stock below your target buy level, and then make your move. Oh, and one final piece of advice ... once you do buy, ignore the stocks for a while. You may be surprised what research and patience can deliver over the long run.
Analysts, schmanalysts -- value investors are Foolish enough to look past Wall Street's fickle consensus. A subscription to Motley Fool Inside Value can help you find the market's best bargains. Sign up today for a 30-day free trial.
Fool contributor Timothy M. Otte searches for value from Atlanta. He owns shares of Berkshire Hathaway. The Fool has a disclosure policy.