On Tuesday, February 23, Arena Pharmaceuticals (NASDAQ:ARNA) will release its latest earnings report. Check out Benzinga's preview to understand the implications.
Net Income, Earnings, And Earnings Per Share
Earnings and especially earnings per share (EPS) are useful measures of a company's profitability. Total earnings, which is also referred to as net income, equals total revenue minus total expenses. EPS equals to net income divided by the number of shares outstanding.
Earnings And Revenue
Based on Arena Pharmaceuticals management projections, analysts predict EPS of $1.85 on revenue of $560.00 thousand. In the same quarter last year, Arena Pharmaceuticals posted EPS of $1.76 on sales of $3.00 million.
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.
The Wall Street estimate would represent a 5.11% decline in the company's earnings. Sales would be down 81.35% on a year-over-year basis. Here is how the company's reported EPS has stacked up against analyst estimates in the past:
Over the last 52-week period, shares are up 69.47%. Given that these returns are generally positive, long-term shareholders can relax going into this earnings release. Long-term shareholders are already enjoying 12-month gains prior to the announcement.
Do not be surprised to see the stock move on comments made during its conference call. Arena Pharmaceuticals is scheduled to hold the call at 16:30:00 ET and can be accessed here.
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