Option Investor
Glossary

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Earnings Warning

When a company announces it will not be able to meet analysts' profit forecasts for a particular period (quarter, year-end, etc). On the other side of the coin, it also means that a company expects to lose more than what analysts were estimating (not all companies have earnings). Reasons for missing profit or loss targets may include weak sales, higher-than-expected selling, general and administrative expenses, delays in the signings of contracts, weather conditions, change in buying patterns of consumers, among others. Earnings warnings will typically appear 2-3 weeks before the end of a company's quarter.