Shares in Merlin Entertainments tumbled 8 per cent on Monday morning after the firm warned that June’s rollercoaster accident would damage profits.

Merlin said the serious accident at Alton Towers on 2 June has had “an adverse impact on trading at the start of the critical summer period and on the Board’s expectations for the financial performance of the Group for the full year.”

The theme park was shut for five days after the crash.

Profits are expected to be around £40m-£50m, compared with £87m in 2014, the company said in a trading update.

Merlin joins the likes of Rolls-Royce, Tate & Lyle and Balfour Beatty, which have all in recent months warned that profits are set to disappoint.

Investors with shares in these firms may well be left unsettled by profit warnings. But what action, if any, should they take?

Here, we explain what a profit warning is and what it means for investors.

In short, a profit warning is when a company announces that its earnings will not meet analyst expectations. It is usually done two or more weeks before an earnings announcement to soften the blow to investors.

On hearing a profit warning, the natural instinct for an investor may be to cut their losses and sell. After all, why invest in a company that is clearly not doing very well?

However, this is an ill-advised move, according to experts.

The first thing to do is find out the reasons behind the warning; there could be a whole host of factors, some of which may be short term and out of a company’s control. Take the Debenhams surprise profit warning a couple of years ago, for example, which was blamed on a fall in sales in when the country was covered in snow.

The best thing you can do is not make any rash decisions.

Adrian Lowcock of AXA Wealth says: “Do not sell or buy shares on an impulse. Act in haste repent in leisure as they say. Usually when an investor experiences a loss, they will go through a range of emotions such as anger or fear. This may lead them to make an irrational decision.”

A good tip is to remind yourself of the reasons you bought the shares in the first place and decide whether these reasons are still valid today.

Lowcock says: “If the answer is no, then the reason to own the shares has gone so you are better off selling and moving on.”

However, if the company has given a well argued, easy to understand reason and the business looks sound, the profit warning may be a one off.

If this is the case short term investors may in fact see it as a possible buying opportunity, says Graham Spooner, investment research analyst at The Share Centre.

Having said that, Spooner says investors should not be afraid to cut their losses and move on.

“The share price is unlikely to climb to previous levels quickly and investors should ignore any emotional attachment. Remember that any previous gains were paper profits and holding onto the investment is likely to have a negative impact on a portfolio,” he says.

“Depending on the cause the announcement is likely to put pressure on the sector as a whole, so investors may wish to seek opportunities elsewhere in the market.”

So the main advice is don’t panic and remember that research is the key to successful investing.