Preview: First Merchants's Earnings

First Merchants FRME announces its next round of earnings this Thursday, January 28. Here is Benzinga's everything-that-matters guide for this Thursday's Q4 earnings announcement.

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

Wall Street analysts see First Merchants reporting earnings of $0.66 per share on revenue of $123.38 million. First Merchants EPS in the same period a year ago totaled $0.9. Sales were $121.83 million.

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 post earnings in line with the consensus estimate when it reports Thursday, EPS would be down 26.67%. Sales would be have grown 1.27% from the same quarter last year. Here is how the company's EPS has stacked up against analyst estimates in the past:

Stock Performance

Shares of First Merchants were trading at $39.23 as of January 26. Over the last 52-week period, shares are down 6.57%. Given that these returns are generally negative, long-term shareholders are probably upset going into this earnings release.

Do not be surprised to see the stock move on comments made during its conference call. First Merchants is scheduled to hold the call at 14:30:00 ET and can be accessed here.