Fourth quarter numbers are in and if results have fallen short of expectations it is time to assess whether to preannounce. There are no hard, fast rules, but there are a few questions we think are worth considering:

• What do we understand about why the performance differed from expectations? How much more will we know by the time we are scheduled to report?
• Is our performance notably different from that of our industry competitors?
• While short of our guidance, will our performance also be short of consensus estimates or outside the range of all published estimates?
• How much of our miss is attributable to swing factors identified when we provided the guidance?
• Is our miss attributable to new impacts, or the same headwinds persisting for longer than expected?
• Are the headwinds or challenges within our control or more macro?
• Do our publishing analysts regularly cite the challenges we are facing as risk factors?
• How has this management team handled shortfalls in the past?
• Could we accelerate our full earnings report rather than do two separate reports, which risks doubling the focus (and headlines) on the negative?

In considering preannouncing, a core determinant should be whether a company is in possession of information that is new to the market. If a shortfall is attributable to factors well known to the company’s investors, every effort should be made to publish a single earnings report as soon as it is possible to have a clear read-out as to why results differed, what adjustments will be made to navigate the changes and how progress should be measured going forward.