Benzinga | Jan 27, 2021 10:07AM EST

A Preview Of Arthur J. Gallagher's Earnings

Arthur J. Gallagher (NYSE:AJG) 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.

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 predict Arthur J. Gallagher will report earnings of $0.78 per share on revenue of $1.45 billion. Arthur J. Gallagher EPS in the same period a year ago totaled $0.58. Sales were $1.72 billion.

What Are Analyst Estimates And Earnings Surprises, And Why Do They Matter?

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 match the consensus estimate when it reports Thursday, earnings would be up 34.48%. Revenue would be down 15.75% from the year-ago period. Arthur J. Gallagher's reported EPS has stacked up against analyst estimates in the past like this:

Quarter Q3 2020 Q2 2020 Q1 2020 Q4 2020EPS Estimate 0.92 0.72 1.73 0.52EPS Actual 1.08 0.94 1.83 0.58Revenue Estimate 1.41 B 1.41 B 1.76 B 1.40 BRevenue Actual 1.85 B 1.58 B 1.83 B 1.72 B

Stock Performance

Over the last 52-week period, shares are up 14.78%. 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. Arthur J. Gallagher is scheduled to hold the call at 17:15:00 ET and can be accessed here.