Benzinga | Jan 19, 2021 10:26AM EST

Earnings Outlook for Alcoa

On Wednesday, January 20, Alcoa (NYSE:AA) will release its latest earnings report. Check out Benzinga's preview to understand the implications.

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 expects EPS of $0.1 and sales around $2.34 billion. Alcoa's loss in the same period a year ago was $0.31 per share. Quarterly sales came in at $2.44 billion.

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.

The analyst consensus estimate would represent a 132.26% increase in the company's earnings. Sales would be down 3.94% on a year-over-year basis. Here is how the company's reported EPS has stacked up against analyst estimates in the past:

Quarter Q3 2020 Q2 2020 Q1 2020 Q4 2020EPS Estimate -1.38 -0.54 -0.24 -0.23EPS Actual -1.17 -0.02 -0.23 -0.31Revenue Estimate 2.23 B 2.11 B 2.35 B 2.47 BRevenue Actual 2.37 B 2.15 B 2.38 B 2.44 B

Stock Performance

For a full 12 months, the return has risen by 42.93%. Given that these returns are generally positive, long-term shareholders are probably relaxed going into this earnings release. Long-term shareholders are already enjoying 12-month gains prior to the announcement.

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