Wednesday 02 June Elastic (NYSE: ESTC) will release its latest earnings report. Decipher the ad with help from Benzinga.

What are earnings, net income, and earnings per share?

Profit and especially earnings per share (EPS) are useful measures of a company’s profitability. Total income, also known as net income, is equal to total income minus total expenses. EPS is equal to net income divided by the number of shares outstanding.

Earnings and income

Wall Street analysts see Elastic reporting a quarterly loss of $ 0.16 per share on sales of $ 158.91 million. Elastic reported a loss per share of $ 0.12 when it released its earnings for the same quarter last year. Sales during this period totaled $ 123.62 million.

Why analyst estimates and earnings surprises matter

Analysts who cover the company will release forward-looking estimates of its revenue and EPS quarterly. By averaging every EPS and revenue forecast that every analyst makes on a company during a quarter, we get the “consensus estimates”. A business showing profit or revenue above or below the consensus estimate is known as a “profit surprise” and can move the stock by a considerable margin.

Wall Street’s consensus estimate for profits would represent a 33.33% drop for the company. Revenue is reportedly up 28.54% compared to the same quarter last year. Here’s how the EPS reported by Elastic has compared to analyst estimates in the past:

Trimester Q3 2021 Q2 2020 Q1 2020 Q4 2020
EPS estimate -0.15 -0.20 -0.18 -0.31
Actual EPS -0.04 -0.03 0.06 -0.12
Income estimate 146.72 million 130.50 million 120.86 million 116.95 million
Actual turnover 157.12 million 144.89 million 128.87 million 123.62 million

Equity return

For a full 12 months, the yield increased by 34.27%. Given that these returns are generally positive, long-term shareholders are likely to be relaxed as this earnings release draws near. Long-term shareholders are already enjoying gains 12 months before the announcement.

Do not be surprised to see the action evolve on the words made during his conference call. Elastic is scheduled to hold the call at 5:00:00 PM ET and can be accessed here.

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