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On Wednesday, January 27, Abbott Laboratories (NYSE:ABT) will release its latest earnings report. Check out Benzinga's preview to understand the implications.
What Are Earnings, Net Income, 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 management's projections, Abbott Laboratories analysts model for earnings of $1.35 per share on sales of $9.94 billion. Abbott Laboratories reported a profit of $0.95 per share when it published results during the same quarter last year. Sales in that period totaled $8.31 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 match the consensus estimate, earnings would be up 42.11%. Sales would be up 19.56% from the year-ago period. Abbott Laboratories's reported EPS has stacked up against analyst estimates in the past like this:
Over the last 52-week period, shares are up 28.9%. 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. Abbott Laboratories is scheduled to hold the call at 09:00:00 ET and can be accessed here.
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