Study shows less than 10% of FTSE 100 companies hit analysts' forecasts
Only 9% of FTSE100 companies achieved their year-end EPS (earnings per share) forecast for their year-ending 31 December 2003 or the most recent year-end thereafter according to a study released by Parson Consulting, the financial management consultancy. In a comparative study based on an analysis of S&P500 2003 third quarter results, 20% of companies achieved their EPS forecast. Most US companies overperformed relative to forecast.
"These findings illustrate how inaccurate the forecasting process remains, both in the UK and the US,? says Mark Hutchinson, Managing Director, Parson Consulting, UK. ?Accurate forecasting should be an integral and important part of any businesses' performance management framework, but our research demonstrates this is not always the case.
"With the recent increase in regulation such as the Sarbanes-Oxley Act in the US, the upcoming Flint review in the UK as well as the recent Smith and Higgs reviews, companies have had to focus on how accurately they report their historic information. It will not be long before the emphasis shifts to looking at how companies forecast what will be happening in the future. The mandatory Operating and Financial Review of all UK quoted companies may be the first step in this direction."