Earnings Preview: Varian Medical Systems

On Tuesday, October 27, Varian Medical Systems VAR will release its latest earnings report. Benzinga's report can help you figure out the ins and outs of the earnings release.

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

Wall Street analysts see Varian Medical Systems reporting earnings of $1.02 per share on sales of $812.96 million. In the same quarter last year, Varian Medical Systems announced EPS of $1.21 on revenue of $878.90 million.

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

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, quarterly profit would be down 15.7%. Revenue would be down 7.5% on a year-over-year basis. Here is how the company's reported EPS has stacked up against analyst estimates in the past:

Quarter Q3 2020 Q2 2020 Q1 2020 Q4 2019
EPS Estimate 0.52 0.85 1.19 1.21
EPS Actual 0.78 0.85 1.16 1.21
Revenue Estimate 664.38 M 769.98 M 826.61 M 858.46 M
Revenue Actual 694.30 M 794.50 M 828.90 M 878.90 M

Stock Performance

Over the last 52-week period, shares are up 42.12%. Given that these returns are generally positive, long-term shareholders can be content going into this earnings release.

Do not be surprised to see the stock move on comments made during its conference call. Varian Medical Systems is scheduled to hold the call at 16:30:00 ET and can be accessed here.

Posted In: Earnings