How Investors Should React When a Company Reports Weak Guidance: Jim Cramer

Is weak guidance enough to take action on a stock? Here's Jim Cramer's educational tip of the day.
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Is weak guidance enough to warrant a selloff?

Jim Cramer warns investors to look past the immediate market reaction to an earnings report. 

"If you think that the balance sheet is not good, and they report weaker number, [such as CenturyLink (CTL) - Get Report ] sell. If you think the balance sheet is good, and they have a history of giving you negative guidance, buy. So, that's the teaching moment. History of negative guidance, send this doc down. Workday (WDAY) - Get Report does the same thing. Buy if the balance sheet's good. History of negative guidance, the balance sheet's bad, sell," Jim Cramer said. 

Salesforce (CRM) - Get Report reported earnings after the bell Monday. 

The company posted stronger-than-expected fourth-quarter earnings and raised its revenue guidance for the current financial year, but the cloud company issued near-term earnings guidance that was modestly weaker than analysts' forecasts.

Looking into 2019, Salesforce said it was raising its revenue forecast to a range of $15.95 billion to $16.05 billion and said it expects first-quarter revenue in the range of $3.67 billion to $3.68 billion, just shy of the $3.7 billion forecast. Non-GAAP earnings were forecast in the range of 60 cents to 61 cents a share, largely in-line with Wall Street estimates.

Related. Think Salesforce CEO Benioff Is a Fraud? You Will Be Wrong

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