ServiceNow's Earnings: A Preview

On Wednesday, January 27, ServiceNow NOW will release its latest earnings report. Here is Benzinga's outlook for the company.

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

ServiceNow EPS is expected to be around $1.05, according to sell-side analysts. Sales will likely be near $1.21 billion. ServiceNow EPS in the same period a year ago totaled $0.96. Revenue was $951.77 million.

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 company in a quarter yields the "consensus estimates." A company posting earnings or revenue above or below the consensus estimate is known as an "earnings surprise" and may move the stock by a considerable margin.

If the company were to match the consensus estimate, earnings would be up 9.38%. Revenue would be have grown 27.13% from the same quarter last year. Here is how the company's reported EPS has stacked up against analyst estimates in the past:

Stock Performance

Shares of ServiceNow were trading at $537.55 as of January 25. Over the last 52-week period, shares are up 70.44%. Given that these returns are generally positive, long-term shareholders are probably content going into this earnings release.

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