Benzinga | Jan 26, 2021 10:21AM EST

A Preview Of Cree's Earnings

Cree (NASDAQ:CREE) announces its next round of earnings this Wednesday, January 27. Here is Benzinga's look at Cree's Q2 earnings report.

Net Income, Earnings, And Earnings Per Share

Earnings and EPS are useful metrics of profitability. Total earnings also known as net income is equal to total revenue minus total expenses. Dividing net income by the total number of shares outstanding yields EPS.

Earnings And Revenue

Wall Street expects an EPS loss of $0.25 and sales around $121.60 million. Cree reported a loss of $0.1 when it published results during the same quarter last year. Sales in that period totaled $239.90 million.

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 Wednesday, EPS would be down 150.0%. Sales would be down 49.31% on a year-over-year basis. Here is how the Cree's reported EPS has stacked up against analyst estimates in the past:

Quarter Q1 2020 Q4 2020 Q3 2020 Q2 2020EPS Estimate -0.21 -0.19 -0.15 -0.09EPS Actual -0.19 -0.18 -0.14 -0.10Revenue Estimate 209.88 M 198.70 M 222.75 M 236.38 MRevenue Actual 216.60 M 205.70 M 215.50 M 239.90 M

Stock Performance

Over the last 52-week period, shares are up 119.2%. Given that these returns are generally positive, long-term shareholders can relax 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. Cree is scheduled to hold the call at 17:00:00 ET and can be accessed here.