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Market Overview

Earnings Preview: IBM

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IBM (NYSE:IBM) will be releasing its next round of earnings this Thursday, January 21. For all of the relevant information, here is your guide for Thursday's Q4 earnings announcement.

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, IBM analysts model for earnings of $1.79 per share on sales of $20.64 billion. In the same quarter last year, IBM reported EPS of $4.71 on revenue of $21.78 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 down 62.0%. Sales would have fallen 5.22% from the same quarter last year. The company's reported EPS has stacked up against analyst estimates in the past like this:

Quarter Q3 2020 Q2 2020 Q1 2020 Q4 2020
EPS Estimate 2.58 2.07 1.79 4.68
EPS Actual 2.58 2.18 1.84 4.71
Revenue Estimate 17.54 B 17.72 B 17.62 B 21.64 B
Revenue Actual 17.56 B 18.12 B 17.57 B 21.78 B

Stock Performance

Over the past 52-week period, shares of IBM have declined 9.24%.

Do not be surprised to see the stock move on comments made during its conference call. IBM is scheduled to hold the call at 17:00:00 ET and can be accessed here.

 

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Posted-In: BZI-EPEarnings