What Are Earnings, Net Income, And Earnings Per Share?
Earnings and EPS are useful metrics of profitability. Total earnings also known as net income is equal to total revenue minus total expenses. Dividing net income by the total number of shares outstanding yields EPS.
Earnings And Revenue
Alibaba Group Holding EPS is expected to be around $3.26, according to sell-side analysts. Sales will likely be near $33.31 billion. In the same quarter last year, Alibaba Group Holding reported EPS of $2.61 on revenue of $23.19 billion.
Why Analyst Estimates And Earnings Surprises Are Important
Wall Street analysts who study this company will publish analyst estimates of revenue and EPS. The averages of all analyst EPS and revenue estimates are called the “consensus estimates”; these consensus estimates can have a significant effect on a company’s performance during an earnings release. When a company posts earnings or revenue above or below a consensus estimate, it has posted an “earnings surprise”, which can really move a stock depending on the difference between actual and estimated values.
If the company were to report earnings in line when it publishes results Tuesday, earnings would be up 24.9%. Revenue would be have grown 43.63% from the same quarter last year. Here is how the Alibaba Group Holding’s reported EPS has stacked up against analyst estimates in the past:
|Quarter||Q2 2020||Q1 2020||Q4 2020||Q3 2020|
|Revenue Estimate||23.17 B||21.34 B||15.20 B||22.45 B|
|Revenue Actual||22.84 B||21.76 B||16.14 B||23.19 B|
Shares of Alibaba Group Holding were trading at $253.95 as of January 29. Over the last 52-week period, shares are up 15.2%. Given that these returns are generally positive, long-term shareholders are probably content going into this earnings release.
Do not be surprised to see the stock move on comments made during its conference call. Alibaba Group Holding is scheduled to hold the call at 07:30:00 ET and can be accessed here.