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Preview: Discover Financial's Earnings

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Discover Financial (NYSE: DFS) announces its next round of earnings this Wednesday, October 21. Here is Benzinga's everything-that-matters guide for this Wednesday's Q3 earnings announcement.

What Are Earnings, Net Income, And Earnings Per Share (EPS)?

Earnings and especially earnings per share 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

Analysts covering Discover Financial modeled for quarterly EPS of $1.53 on revenue of $2.67 billion. Discover Financial reported a profit of $2.36 per share when it published results during the same quarter last year. Sales in that period totaled $2.90 billion.

What Are Analyst Estimates And Earnings Surprises, And Why Do They Matter?

Analysts who cover this company will publish forward-looking estimates of its revenue and EPS each quarter. Averaging together every EPS and revenue prediction that each analyst makes about a given company yields the "consensus estimates." If the company posts earnings or revenue above or below the consensus estimate, the stock may move by a considerable margin.

If the company were to report earnings in line when it publishes results Wednesday, earnings would be down 35.17%. Sales would be down 7.93% on a year-over-year basis. Discover Financial's reported EPS has stacked up against analyst estimates in the past like this:

Quarter Q2 2020 Q1 2020 Q4 2020 Q3 2019
EPS Estimate -0.28 0.94 2.24 2.29
EPS Actual -1.20 -0.25 2.25 2.36
Revenue Estimate 2.66 B 2.89 B 2.95 B 2.89 B
Revenue Actual 2.66 B 2.89 B 2.94 B 2.90 B

Stock Performance

Over the last 52-week period, shares are down 19.98%. Given that these returns are generally negative, long-term shareholders won't be happy going into this earnings release.

Do not be surprised to see the stock move on comments made during its conference call. Discover Financial is scheduled to hold the call at 08:00:00 ET and can be accessed here: https://event.on24.com/eventRegistration/EventLobbyServlet?target=reg20.jsp&referrer=https%3A%2F%2Finvestorrelations.discover.com%2F&eventid=2623079&sessionid=1&key=C9A58CF86DD724AC1BB32D2E82489E08&regTag=&sourcepage=register

 

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