IBM's Earnings: A Preview

On Monday, July 19, IBM IBM will release its latest earnings report. Decipher the announcement with Benzinga's help.

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

Analysts covering IBM modeled for quarterly EPS of $2.29 on revenue of $18.29 billion. IBM reported a per-share profit of $2.18 when it published results during the same quarter last year. Sales in that period totaled $18.12 billion.

Why Analyst Estimates And Earnings Surprises Are Important

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 post earnings in line with the consensus estimate when it reports Monday, EPS would be up 5.05%. Revenue would be up 0.92% 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 IBM were trading at $140.45 as of July 15. Over the last 52-week period, shares are up 10.96%. Given that these returns are generally positive, long-term shareholders can be satisfied going into this earnings release.

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.