Benzinga | Feb 15, 2021 10:38AM EST

KAR Auction Services's Earnings: A Preview

KAR Auction Services (NYSE:KAR) announces its next round of earnings this Tuesday, February 16. Here is Benzinga's everything-that-matters guide for this Tuesday's Q4 earnings announcement.

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

Based on management's projections, KAR Auction Services analysts model for earnings of $0.28 per share on sales of $571.95 million. KAR Auction Services EPS in the same period a year ago totaled $0.19. Revenue was $671.30 million.

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 Tuesday, EPS would be up 47.37%. Sales would be down 14.8% from the same quarter last year. Here is how the company's EPS has stacked up against analyst estimates in the past:

Quarter Q3 2020 Q2 2020 Q1 2020 Q4 2020EPS Estimate 0.27 -0.14 0.16 0.29EPS Actual 0.45 0.08 0.09 0.19Revenue Estimate 639.28 M 415.73 M 649.22 M 665.71 MRevenue Actual 593.60 M 419.00 M 645.50 M 671.30 M

Stock Performance

Over the last 52-week period, shares are down 13.4%. Given that these returns are generally negative, long-term shareholders won't be happy going into this earnings release.

Do not be surprised to see the stock move on comments made during its conference call. KAR Auction Services is scheduled to hold the call at 08:30:00 ET and can be accessed here.